This case is before the Authority on a negotiability appeal filed by
the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management
Relations Statute (the Statute), and concerns the negotiability of 25
proposals.

For the reasons fully explained in sections III through VI of this
decision, we reach the following conclusions with respect to the proposals
examined herein. We dismiss, without prejudice, the petition for review as it
pertains to Proposals 4, 5, 9(c), 10(b), 11, 13, 14, and 20, because the Agency
does not contest these proposals. We also dismiss the petition for review as it
pertains to Proposals 12, 15, 16, 18, 19, and 24, because the proposals are
outside the Agency's duty to bargain. However, we find that Proposals 1, 2, 3,
6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25 are within the Agency's duty
to bargain.

More particularly, as to the proposals examined herein, we find the
following:

Proposal 1, which defines the financial interests that will be presumed
to constitute a conflict of interest, is within the duty to bargain. See
Section IV. A.

Proposals 2 and 3, which provide the methods by which examiners may
determine a company's industry sector so as to permit examiners to identify
conflicting financial interests, are within the duty to bargain. See
Section IV. B.

Proposal 6, which provides a method for resolving disputes over the
industry codes assigned to an examiner's art unit or to a particular company,
is within the duty to bargain. See Section V. B.

Proposal 7, which requires that examiners be told which financial
holdings are barred because of their new or changed work assignments, and that
management provide the information in the form specified in Proposal 3, is
within the duty to bargain. See Section IV. B.

Proposal 8, which concerns situations when a preexisting financial
interest becomes conflicting because the Agency transfers an examiner to a new
art unit or changes the industry sectors assigned to the examiner's art unit,
is within the duty to bargain. See Section IV. C.

Proposals 9(a) and 9(b), which specify the actions that the Agency is
permitted to take when conflicts of interest arise because an examiner is
assigned work that is either not typical of the work in the examiner's assigned
industry sector, or the result of a temporary transfer of work, are within the
duty to bargain. See Section V. E.

Proposal 10(a), which establishes certain time limits for accomplishing
divestiture, is within the duty to bargain. See Section V. F.

Proposal 12, which specifies the actions that the Agency is permitted
to take when conflicts of interest arise because of an examiner's vested
interest in a pension or retirement fund, is not within the duty to bargain.
See Section V. E.

Proposal 15, which would permit an examiner who asserts a Fifth
Amendment right against self-incrimination to refuse to submit a financial
disclosure statement until such time as immunity from criminal prosecution were
granted, is not within the duty to bargain. See Section V. H.

Proposal 16, which would grant examiners a waiver of criminal
liability based on information derived from a financial disclosure statement
that was completed in good faith, is not within the duty to bargain. See
Section V. H.

Proposal 17, which prohibits the Agency from removing an examiner based
on particular conflicts of interest, is within the duty to bargain. See
Section V. G.

Proposal 18, which provides a blanket waiver of conflicts of interest
where the facts set forth in the proposal exist, is not within the duty to
bargain. See Section V. D.

Proposal 19, which requires an automatic waiver of conflicts of
interest when the requirements set forth in the proposal are met, is not within
the duty to bargain. See Section V. C.

Proposal 21, which would exempt examiners at GS-12 level and lower from
any requirement to file a financial disclosure statement, is within the duty to
bargain. See Section V. I.

Proposal 22, which would establish a joint labor-management committee
to address conflict of interest issues which are the result of currently
employed examiners seeking employment outside the Agency, is within the duty to
bargain. See Section VI. A.

Proposal 23, which requires the Agency to establish a code to enable
examiners to identify on their time sheets the work time they spend fulfilling
financial disclosure and conflict of interest requirements, is within the duty
to bargain. See Section IV. D.

Proposal 24, which would exempt examiners from including in their
financial disclosure statements information concerning the interests set forth
in the proposal, is not within the duty to bargain. See Section V. J.

Proposal 25, which would require the Agency to seek OGE approval of an
alternative financial disclosure procedure that satisfies the criteria of the
proposal, and would require that a Union representative be included in the
development and drafting of the alternative procedure, is within the duty to
bargain. See Section V. K.

Patent examiners are responsible for reviewing applications for patents
submitted by the general public. After examining an application to determine
whether the proposed invention warrants a patent, the examiner drafts a written
response to the applicant concerning the invention's patentability.

Patent examiners are assigned to work in 1 of 16 "groups," which
are established in accordance with general areas of technology: for example,
chemical, electrical, or mechanical. Statement of Position at 3 n.1. Within
each group, examiners are assigned to smaller, more specialized "art units."
Id. at n.2. Each group comprises from 4 to 13 art units, and each art
unit typically comprises between 10 and 20 examiners who are assigned to
specific industry sectors. Each art unit is supervised by a Supervisory Primary
Examiner (SPE), who reports to an overall group director.

A "docket system" governs patent examiners' workloads. Id. at 4.
In particular, each examiner has a docket that lists all the patent
applications that have been assigned to that examiner. An examiner's SPE is
responsible for ensuring that patent applications within the SPE's art unit are
timely reviewed. The record does not disclose the size, or average size, of an
examiner's docket.

B. OGE Financial Disclosure and Ethics Regulations

This dispute arises from the Agency's proposed policy implementing OGE
regulations governing financial disclosure and ethics, codified at 5 C.F.R.
parts 2634 and 2635.(1) As discussed in more detail infra, Part 2634
establishes requirements for financial disclosure by Federal employees in the
Executive Branch and Part 2635 establishes standards of ethical conduct for
such employees. Both parts implement 18 U.S.C. § 208, a Federal
conflict of interest statute.(2)

Before filing this petition for review, the Union requested that the
Agency provide written allegations concerning the proposals or parts of
proposals believed to be outside the duty to bargain. The Agency did not timely
respond to the Union's request, and the Union filed this petition for review
with the Authority.(3)

The Union's petition for review contains 25 proposals. However, the
Agency's statement of position addresses the negotiability of all or part of
only 19 of the 25 proposals. The Union requests that the Authority determine
whether there is a duty to bargain over all of the proposals in its petition
for review, including those not addressed by the Agency in its statement of
review.

Because the Agency did not timely respond to the Union's request for
written allegations, its objections are presented for the first time in its
statement of position. In such circumstances, the Authority will find that
proposals that are not objected to are not in dispute, and will not consider
them further. See, e.g., American Federation of Government Employees,
Local 3172 and U.S. Department of Health and Human Services, Social Security
Administration, Modesto, California, 48 FLRA 489 n.2 (1993) (Member
Armendariz concurring as to other matters), decision and order on request
for reconsideration, 49 FLRA 302 (1994). Accordingly, we dismiss the
petition as to Proposals 4, 5, 9(c), 10(b), 11, 13, 14, and 20 without
prejudice to the Union's right to file an appeal if the Agency alleges that the
proposals are outside the duty to bargain because they are inconsistent with
law, rule, or regulation and other conditions governing review are met. See,
e.g., American Federation of Government Employees, Council 214 and U.S.
Department of the Air Force, Headquarters, Air Force Materiel Command,
Wright-Patterson Air Force Base, Ohio, 53 FLRA 131, 132 (1997).

IV. Proposals Alleged To Be Inconsistent Only With Management's
Rights(4)

A. Proposal 1

An examiner, an examiner's spouse, dependent child, or general
partner will not acquire or retain any financial interest in any company in an
industry sector which is within the primary responsibility of the examiner and
such other industry sector within the art unit for which there is a reasonable
probability of assignment to the examiner. It is the examiner's responsibility
to exercise reasonable due diligence to avoid a conflict between any of the
examiner's financial interests and the examiner's assigned industry
sector(s).

1. Positions of the Parties

a. Agency

The Agency views an examiner's entire art unit as the appropriate area
for defining potential conflicts of interest, regardless of whether the
examiner routinely examines all of the technologies encompassed by his or her
art unit. The Agency asserts that the scope of "a potential conflict of
interest" under Proposal 1 is "significantly narrower" and, as a result,
Proposal 1 affects its right to assign work under section 7106(a)(2)(B) of the
Statute. Statement of Position at 8. In particular, the Agency argues that,
"[i]f the scope of the financial restrictions were to be less than the art
unit, as the Union has proposed in Proposal 1, an SPE could conceivably be
forced to not assign cases to members of his art unit in order to avoid
conflicts." Id.

In addition, the Agency claims that Proposal 1 is not an appropriate
arrangement under section 7106(b)(3) of the Statute, because "the art-unit
scope of its ethics rules does not adversely affect examiners . . . ."
Id. at 11. According to the Agency, "Proposal 1 places substantial
restrictions -- or, in some circumstances, even outright prohibitions -- on the
Agency's ability to . . . effect work assignments efficiently and without
delay." Id. at 11-12. Under these circumstances, the Agency contends
that the proposal excessively interferes with its ability to carry out its
mission.

b. Union

The Union contends that the "art unit industry sector" proposed by the
Agency is too broad, and would unnecessarily require examiners to divest, or
not acquire, financial holdings. According to the Union, Proposal 1 reflects a
"compromise between the past practice of limiting conflict of interest issues
to the employee's own docket and the Agency's proposal to extend restrictions
to all dockets within an art unit."(5) Reply Brief at 18.

In this regard, the Union states that its proposal "covers the industry
sector actually assigned to the examiner plus a
'back-up docket' . . . not currently assigned . . .
[that will have the] . . . most reasonable probability of future assignment to
the examiner." Id. (emphases in original). The Union also states that,
if the reasonable probability of future assignment changes, the back-up docket
could be changed. In addition, the Union contends that it is "exceedingly
doubtful that an examiner" experienced in one industrial area "would be
competent to examine products" in another industrial area." Id. at
22.

The Union claims that Proposal 1 does not affect management's rights
under the Statute because "[n]ot one of the rights reserved to management in
[s]ection 7106(a) includes within its scope the substance of conflict of
interest rules." Id. at 19. Moreover, the Union rejects the Agency's
argument that the proposal conflicts with its right to assign work because of
any potential delay in work assignments. According to the Union: (1) it is
"highly speculative" whether an examiner will be assigned work outside his
expertise but within his art unit; and (2) the time it usually takes an
examiner to begin work on a case ("anywhere from 30 days up to a year") is
"adequate time for the handling of any issues related to conflict of interest
without delaying the time at which the work would otherwise have been done."
Id. at 20.

The Union also claims that Proposal 1 is negotiable as a procedure
under section 7106(b)(2) of the Statute (6) and/or as an appropriate arrangement under section 7106(b)(3)
of the Statute. With regard to the former argument, the Union claims that the
proposal does not "prevent, or merely restrain, the Agency from assigning any
work at all, regardless of whether the work is in an area which the Agency did
or didn't predict was likely to be assigned to the employee." Id. As for
the latter argument, the Union argues that the Agency's proposed conflict of
interest requirements has "adverse financial and social impact on [an] examiner
with no benefit to the public trust." Id. at 23.

Proposal 1 defines the financial interests that an examiner, as well as
an examiner's spouse, dependent child, or general partner (hereinafter referred
to solely as the examiner), is prevented from acquiring and retaining, whether
or not the examiner actually is assigned work that would result in a conflict
of interest. That is, the proposal defines the financial interests that will be
presumed to constitute a conflict of interest. Under Proposal 1, an examiner
may not acquire or retain financial interests in either: (1) the industry
sector that is within the examiner's primary responsibility; or (2) any other
industry sector in the examiner's art unit in which there is a reasonable
possibility of assignment.

An examiner is required by Proposal 1 to exercise "reasonable due
diligence" to avoid conflicts regarding either sector. The proposal is silent
with respect to the methodology for determining the sector in which there is a
reasonable possibility of assignment. However, the Union states that it intends
that sector, referred to by the Union as the "back-up docket," to be
designated, and redesignated as necessary, by SPEs. Id. at 28. As the
Union's statement is consistent with the wording of the proposal, it is adopted
for the purposes of this decision. SeeNational Education
Association, Overseas Education Association, Laurel Bay Teachers Association
and U.S. Department of Defense, Department of Defense Domestic Schools, Laurel
Bay Dependents Schools, Elementary and Secondary Schools, Laurel Bay, South
Carolina, 51 FLRA 733, 737 (1996).

3. Proposal 1 Does Not Affect the Exercise of Management's Right to
Assign Work Under Section 7106(a)(2)(B) of the Statute

The right to assign work under section 7106(a)(2)(B) of the Statute
encompasses the authority to require employees to perform particular duties.
See, e.g., District No. 1, Marine Engineers Beneficial
Association, (AFL-CIO), Panama Canal Area and Panama Canal Commission, 49
FLRA 461, 466 (1994). The right to assign work also encompasses the authority
to determine when work will be performed. See, e.g., American
Federation of Government Employees, Local 3392 and U.S. Government Printing
Office, Public Documents Distribution Center, Pueblo, Colorado, 52 FLRA 141
(1996). SeealsoAmerican Federation of Government Employees,
Local 1345 and U.S. Department of the Army, Headquarters, Fort Carson and
Headquarters, 4th Infantry Division, Fort Carson, Colorado, 48 FLRA
168, 174 (1993)(Member Armendariz concurring in part and dissenting in part as
to other matters) (Fort Carson).

At the outset, we note that Proposal 1 does not, on its face, address
in any way the assignment of work. However, the Agency claims that Proposal 1
would have two effects on the right to assign work, either of which renders the
proposal outside the duty to bargain.

First, the Agency makes the bare assertion that Proposal 1 would
preclude the Agency from exercising its right to assign work because an SPE
could "conceivably be forced to not assign cases . . . to avoid conflicts."
Statement of Position at 8. Without any evidence to support this assertion, we
are unable to conclude that the Agency would be precluded from exercising its
right to assign work under the Statute. In any event, as interpreted by the
Authority, under Proposal 1 the Agency can always modify or change the "back-up
docket."

Moreover, OGE regulations provide, in addition to employee
disqualification, for employee divestiture of conflicting financial
interests.(8) It follows from these provisions
that holding the financial interest at the time assignment is made does not
necessarily preclude the employee from working on an assignment, since the
employee may have divested the financial interest by the time work is begun.

Second, the Agency makes a general assertion that Proposal 1 would
delay work assignments, a claim the Union construes as encompassing actual work
on--participation in--a case. Authority precedent establishes in general that
proposals that preclude an agency from exercising a management right, unless or
until other events occur, affect the exercise of that right. See, e.g.,
National Association of Government Employees, Local R1-109 and Department of
Veterans Affairs, Medical Center, Newington, Connecticut, 53 FLRA No. 47,
slip op. at 16 (1997); National Weather Service Employees Organization
(MEBA/NMU) and U.S. Department of Commerce, National Oceanic and Atmospheric
Administration, National Weather Service, Silver Spring, Maryland, 46 FLRA
49 (1992).

Here, the record provides an insufficient basis on which to find that
Proposal 1 interferes with the Agency's right to assign work because it would
delay the assignment of work. In particular, the Agency fails to specify the
delay to which it refers. Finding such delay would require assumptions that:
(1) examiners will be assigned work outside both their primary area of
responsibility and their "back-up area" as designated by their supervisors; (2)
examiners will have conflicting interests; and (3) examiners would be ready to
commence work prior to the time for divesture has elapsed.

In addition, the only argument in the record--the Union's--with regard
to these assumptions is that: (1) "[t]he majority of employees who are in the
situation in which there is at least one unrelated area of technology within
the scope of the organizational unit to which they are assigned never examine
that unrelated area during their entire lifetime career as a patent examiner";
and (2) the normal time necessary for processing a case is "adequate . . . for
the handling of any issues related to [the] conflict of interest without
delaying the time at which the work would otherwise have been done." Reply
Brief at 19, 20.

Based on the foregoing, the delay asserted by the Agency is too
speculative a basis on which to conclude that Proposal 1 affects management's
right to assign work. SeeAmerican Federation of Government
Employees, Council of Locals No. 163 and U.S. Department of Defense, Defense
Contract Audit Agency, 51 FLRA 1504, 1512 (1996) (Member Wasserman,
dissenting) (Authority will not speculate over consequences of a proposal that
are unsupported by the record). Accordingly, we find that Proposal 1 is within
the Agency's duty to bargain.

B. Proposals 2, 3, and 7

Proposal 2:

Reasonable diligence means avoiding conflicts actually known to the
examiner plus reviewing any one of: a. Dun and Bradstreet, b. Standard
and Poor's,c. Moody's, or d. Value Line to determine a company's
industry sector.

Proposal 3:

The Office shall define each industry sector in terminology
consistent with industry areas identified by sources a-d in Section 2 above,
and identify which source the terminology came from.

Proposal 7:

In the event the Office transfers an examiner to a new art unit or
changes industry sector(s) examined in an examiner's existing art unit, the
Office shall provide the examiner with a written statement defining the new
industry sector(s) which has been assigned. The definition will be consistent
with [Proposal] 3. It is the examiner's responsibility to review their [sic]
financial holdings and inform management of any potential
conflicts.

1. Positions of the Parties

a. Agency

The Agency argues that Proposals 2, 3, and 7 are "inextricably linked"
to the scope of financial restrictions in Proposal 1 and, as such, are outside
the duty to bargain for the same reasons as asserted in connection with
Proposal 1. Statement of Position at 12, 13, 18.

b. Union

The Union asserts that Proposals 2, 3 and 7 are not inextricably linked
to Proposal 1. According to the Union, the proposals would be "equally
applicable" under the Agency's proposed scope of conflicts of interest. Reply
Brief at 24, 26, 34.

The Union states that Proposal 2 is intended to "set a definition of
what constitutes reasonable diligence in avoiding conflicts." Id. at 24.
The Union describes Proposal 2 as a "procedure," requiring that employees
"consult one of the standard reference publications of the listed publishers to
determine the industry sector(s) to which the company belongs[]" and "apply
actual personal knowledge of the economic activity of companies." Id.
Proposal 3, according to the Union, "requires that the industry sector
definitions be provided in terms that are commonly used in the published
sources listed in Proposal 2." Id. at 26. According to the Union, the
Agency's definitions make it "difficult to compare the sector definitions with
the description of the financial activities of companies as listed in the
financial literature." Id. at 27. The Union asserts that Proposal 7
requires only that reassigned examiners receive written notification of the
changes in their industry sector in order to identify real or apparent
conflicts of interest that may result from their financial holdings.

2. Meaning of the Proposals

Proposals 2 and 3 provide the methods by which examiners may determine
a company's industry sector so as to permit examiners to identify conflicting
financial interests. Proposal 2 requires an examiner to avoid conflicts that
are known to an examiner and those uncovered by examining one of the four
publications listed in the proposal. Proposal 3 requires the Agency to use
terminology consistent with that in the four publications specified in Proposal
2, and to identify which publication was used. Proposal 7 obligates management
to provide examiners with certain information either when their work
assignments are changed because of their transfer to other art units or the
work assigned to their current art units is modified. In particular, Proposal 7
requires that examiners be apprised of what financial holdings are barred
because of their new or changed work assignments, and that management provide
the information in the form specified in Proposal 3.

3. Proposals 2, 3 and 7 Are Within the Duty to Bargain

With regard to Proposals 2, 3, and 7, the Agency's sole arguments are
that: (1) Proposals 2 and 3 are inextricably linked to Proposal 1 and are,
therefore, outside the duty to bargain for the same reasons as Proposal 1; and
(2) Proposal 7 is inextricably linked to Proposals 1 and 3 and is, for
that reason, outside the obligation to bargain. Consistent with our conclusion
with regard to Proposal 1, we find no basis on which to conclude that Proposals
2 and/or 3 are outside the duty to bargain. Similarly, as Proposals 1 and 3 are
within the duty to bargain, we conclude that Proposal 7 is within the duty to
bargain.

Moreover, even assuming arguendo that Proposal 1 was outside the
duty to bargain, that would not render Proposals 2, 3, and 7 outside the
duty to bargain. Proposals 2, 3, and 7 do not refer to Proposal 1. These
proposals also do not refer to either the "industry sector which is within the
primary responsibility of the examiner," proposed by the Union, or the "art
unit industry sector," preferred by the Agency. Proposal 2 sets forth the
references to be consulted by examiners to avoid financial conflicts of
interest, without regard to how such conflicts are defined. Proposal 3
establishes the terminology to be used in defining industry sectors, also
without regard to how the sectors that constitute a conflict of interest are
defined. Proposal 7 requires the Agency to provide examiners with a written
statement defining new or changed industry sectors assigned to examiners or art
units in which they work. In these circumstances, Proposals 2, 3, and 7 are not
inextricably linked to Proposal 1.

In addition, the Authority has found similar proposals within the duty
to bargain because the purposes of such proposals are to "assure that employees
are informed of what errors the [a]gency has determined appl[y] to jobs and
ensure that [] employees understand what constitutes errors." American
Federation of Government Employees, AFL-CIO, General Committee of AFGE for SSA
Locals and Social Security Administration, 23 FLRA 329, 335 (1986);
seealsoPatent Office Professional Association and U.S.
Department of Commerce, Patent and Trademark Office, 48 FLRA 129, 142
(1993). For example, proposals that do no more than describe, in general, the
conduct required of an employee without limiting management's actions are
within the duty to bargain. SeeNew York State Nurses Association and
Veterans Administration, Bronx Medical Center, 30 FLRA 706, 764 (1987).

Accordingly, we conclude that Proposals 2, 3, and 7 are within the duty
to bargain.

C. Proposal 8

Proposal 8

When a potential conflict arises under [Proposal] 7 above, the
following procedure will be used to resolve the conflict:

(a) When an examiner has a compelling pre-existing financial interest
that would be adversely affected, management shall not make the transfer or the
change referred to in Section 7 above, unless there is no other qualified
examiner available to do the work.

Typical examples of compelling financial interest are spousal
employment, significant illiquid assets and significant interests in the
business of a relative. To be considered compelling[,] the financial interest
must rise to a level analogous to the examples above.

(b) When an examiner has a significant pre-existing financial
interest that would be adversely affected, the examiner may appeal for
reconsideration of the transfer or change referred to in Section 7 above. The
appeal will balance the expertise of the examiners involved, management needs
of balancing dockets and the degree of adverse financial impact on each
examiner involved.

Typical examples of a significant pre-existing financial interest is
an asset that exceeds 30% of the examiner's gross annual salary or an unpaid
teaching position.

1. Positions of the Parties

a. Agency

The Agency argues that the proposal affects the exercise of its rights
to assign employees and work. According to the Agency, under section (a) of the
proposal, there are circumstances in which "management would be prohibited
outright from effecting a transfer of examiners or a change in the art unit's
industry sector." Statement of Position at 20. In addition, according to the
Agency, section (b) of the proposal would "impermissibly limit[]" the Agency's
discretion to make adjustments in staffing and work by permitting examiners to
appeal staffing and work decisions and requiring the Agency to decide the
appeals. Id. The Agency asserts that the technologies reviewed by
examiners are constantly changing, and that it is "essential" in these
circumstances that "the Agency be able to adapt to such changes and make the
corresponding managerial decisions necessary to properly staff the various
technological areas handled by the Agency's examiners." Id.

b. Union

The Union asserts that section (a) of Proposal 8 protects employees
"from what amounts to a career ending management initiated transfer or
reassignment" to an area with which employees have a preexisting conflicting
financial interest. Reply Brief at 36. The Union claims that section (b)
constitutes a "procedure for reevaluating a proposed management initiated
transfer." Id. at 37.

The Union concedes that Proposal 8 "has a direct impact on management's
exercise of its reserved rights[.]" Id. However, according to the Union,
the proposal is negotiable as an appropriate arrangement. In the Union's view,
where an examiner has a preexisting conflict, a management initiated change
that would create a conflict "would adversely affect the examiner to the
greatest extent possible because it would potentially be career ending to the
examiner or his spouse." Id. According to the Union, section (a) of the
proposal does not affect the Agency's rights because it would not preclude
assignments when there are no other qualified examiners. In addition, the Union
points out that the proposal would benefit both parties by facilitating the
Agency's ability to retain qualified examiners.

The Union claims that section (b) of the proposal provides a review
process for examiners who will be adversely affected by a change, and that the
section does not prevent the Agency from making a change. According to the
Union, alternatives to the Agency's decision to transfer "are to be evaluated
in light of three factors to identify and balance the benefits to both
management and the employees." Id.

2. Meaning of the Proposal

Proposal 8 concerns situations when the Agency transfers an examiner to
a new art unit or changes the industry sectors assigned to the examiner's art
unit so that a preexisting financial interest becomes conflicting. The proposal
defines two levels of financial interest: "compelling" and "significant." Where
the interest is "compelling," as defined in the proposal, management may not
assign the examiner the work that causes the conflict unless there is no other
qualified examiner available to replace the affected examiner. When the
financial interest is "significant," an examiner may appeal the action. The
appeal is resolved by balancing three factors: "the expertise of the examiners
involved, management needs of balancing dockets and the degree of adverse
financial impact on each examiner involved."

3. Proposal 8 Affects the Exercise of Management's Right to Assign
Employees and Work

It is well-established that the right to assign work to employees under
section 7106(a)(2)(B) of the Statute encompasses the right to determine the
particular duties and work to be assigned, and the particular employees to whom
or positions to which it will be assigned. See, e.g., National
Treasury Employees Union and Department of the Treasury, Bureau of the Public
Debt, 3 FLRA 769, 775 (1980), aff'd, 691 F.2d 553 (D.C. Cir.
1982). The right to assign work under section 7106(a)(2)(A) of the Statute also
encompasses the assignments and reassignments of employees to positions.
See, e.g., National Treasury Employees Union and U.S. Nuclear
Regulatory Commission, Washington, D.C., 47 FLRA 370, 382 (1993). Here, the
Union concedes that Proposal 8 affects the exercise of management's right to
assign employees and work under section 7106(a)(2)(A) and (B) of the Statute.
See Reply Brief at 36.

4. Proposal 8 Constitutes an Appropriate Arrangement Under Section
7106(b)(3) of the Statute

The approach for determining whether a proposal is within the duty to
bargain under section 7106(b)(3) was first set out in National Association
of Government Employees, Local R14-87 and Kansas Army National Guard, 21
FLRA 24 (1986) (KANG). The Authority initially determines whether the
proposal is intended to be an "arrangement" for employees adversely affected by
the exercise of a management right. An arrangement must seek to mitigate
adverse effects "flowing from the exercise of a protected management right."
United States Department of the Treasury, Office of the Chief Counsel,
Internal Revenue Service v. FLRA, 960 F.2d 1068, 1073 (D.C. Cir. 1992)
(IRS, Chief Counsel).

The alleged arrangement must be "tailored" to compensate employees
suffering the adverse effects attributable to the exercise of management's
rights(s). See, e.g., National Treasury Employees Union, Chapter 243
and U.S. Department of Commerce, Patent and Trademark Office, 49 FLRA 176,
184 (1994) (Member Armendariz concurring in part and dissenting in part)
(Patent and Trademark Office). Section 7106(b)(3) brings within the duty
to bargain proposals that provide "balm" to be administered "only to hurts
arising from" the exercise of management rights. American Federation of
Government Employees, National Border Patrol Council and U.S. Department of
Justice, Immigration and Naturalization Service, 51 FLRA 1308,
1319 (1996) (relying on U.S. Department of the Interior, Minerals Management
Service, New Orleans, Louisiana v. FLRA, 969 F.2d 1158, 1162 (D.C. Cir.
1992)). That section of the Statute does not bring within the duty to bargain
proposals that are so broad in their sweep that the "balm" would be applied to
employees indiscriminately without regard to whether the group as a whole is
likely to suffer, or has suffered, adverse effects as a consequence of
management action under section 7106. Id.SeealsoPatent and Trademark Office, 49 FLRA at 184.

In determining whether a proposal would establish an arrangement that
is appropriate, within the meaning of section 7106(b)(3), the Authority
balances the respective interests of the agency and employees to determine
whether the proposed arrangement excessively interferes with the relevant
management rights. KANG, 21 FLRA at 31-33. In doing so, the Authority
weighs the benefits afforded to employees under the arrangement against the
intrusion on the exercise of management's rights. Id.

Proposal 8 prescribes the measures to be taken when management's
actions -- reassigning an examiner or changing the work assigned to an art unit
-- create conflicts of interest based on the examiner's preexisting financial
interests. As discussed supra in connection with Proposal 1, such
conflicts may, in some circumstances, result in the Agency directing the
examiner to divest the conflicting interests. The Union claims correctly that
those interests can include a spouse's job.(9)

We find that requiring an employee, including a spouse, to divest
financial interests that become conflicting as a result of the Agency's
exercise of its rights to assign employees and work constitutes an adverse
effect resulting from the exercise of a management right. We also find that the
proposal is tailored, in that it concerns only those employees whose financial
interests would be adversely affected by the exercise of those management
rights. Consistent with the foregoing, Proposal 8 is an arrangement for
employees adversely affected by the exercise of management's rights within the
meaning of section 7106(b)(3).

As to the burden imposed by the proposal on management's exercise of
its rights, we note that management retains the discretion to permanently
reassign an examiner or work even where the employee's "compelling" financial
interest would be affected, when there is no other qualified examiner available
to perform the work. Where the employee's "significant" financial interest
would be affected, management could reassign an examiner or change the work
assigned to an art unit when, on reconsideration of the reassignment,
management finds that its decision is supported by the criteria specified in
section (b). Thus, the proposal contemplates that management may reassign
either work or an examiner when there is no available alternative for getting
the work accomplished, or when a balancing of the competing interests favors
management's action.

In balancing the burden the proposal imposes on management's right
against the benefit to employees, it is relevant that the adverse effects are
outside the examiners' control. SeeKANG, 21 FLRA at 32. In
particular, the conflict arises because management's new work assignments or
employee reassignments create conflicts with financial holdings that were
previously authorized.

We conclude that the benefit to examiners of being assured that
reassignments requiring divestiture of their financial interests, or resolution
of a spouse's or dependent child's conflicting employment, can occur only when
other alternatives are unavailable, outweighs the burden imposed on the
Agency's rights to assign employees and work by requiring that the Agency adopt
particular available alternatives to the reassignments. Therefore, the proposal
does not excessively interfere with management's rights to assign employees and
work under section 7106(a)(2)(A) and (B) of the Statute and is an appropriate
arrangement under section 7106(b)(3). As such, it is within the duty to
bargain.

D. Proposal 23

Proposal 23

Time necessary for fulfillment of financial disclosure and conflict
of interest responsibilities by the examiner shall be separately accounted for.
Time spent selecting investments shall not be included. Time accounting sheets
shall include an identification of the appropriate time code.

1. Positions of the Parties

a. Agency

The Agency argues that Proposal 23 is outside the duty to bargain
because it affects the exercise of its right to assign work under section
7106(a)(2)(A). The Agency asserts that requiring it to provide "'other time'
for completion of financial disclosure requirements takes away from employees'
examining time, and directly affects the SPE's ability to regulate workflow . .
. ." Statement of Position at 39-40. The Agency maintains that meeting
financial disclosure requirements, "like federal and state income tax
requirements, is simply not a duty that management must permit during working
hours." Id. at 40.

b. Union

The Union contends that Proposal 23 is intended to "document[] the time
an employee spends meeting . . . financial disclosure responsibilities."
Petition for Review at 14. The Union states that the proposal requires
that:

the time used by the examiner to determine whether a conflict exists
and the resolution of any real or apparent conflicts so found be separately
accounted for and that [m]anagement provide a "time code" for such accounting
on the biweekly time worksheet . . . .

Id.

According to the Union, Proposal 23 has no effect on the assignment of
work because it "merely provides a mechanism to account for time." Reply Brief
at 60. The Union asserts the proposal does not require either that the time
spent fulfilling financial disclosure responsibilities be subtracted from
examining time or that the Agency consider the time in appraising employees. If
the proposal is found to affect management's right to assign work, then the
Union asserts that the proposal constitutes an appropriate arrangement. The
Union asserts:

The financial disclosure and conflict of interest requirement[] is a
new job requirement that is unrelated to the examination of patent
applications. The examiners['] patent examining production performance is
measure[d] in 6 minute increments, and any time spent performing other
functions required by management will have a potential adverse impact on their
production performance rating.

Id. at 61.

2. Meaning of the Proposal

Proposal 23 requires the Agency to establish a code to enable examiners
to identify on their time sheets the work time they spend fulfilling financial
disclosure and conflict of interest requirements. Although not specified in the
proposal, it is clear that the proposal would permit examiners to fulfill these
requirements on duty time. In this regard, the Union does not counter the
Agency's assertion that use of work time would be authorized for this purpose;
the proposal also would be meaningless if such use of work time was not
authorized.

The proposal does not prescribe how management will use this
information. In particular, the proposal does not require management to
consider the amount of time an examiner spends fulfilling these requirements in
evaluating the examiner's productivity. Instead, consistent with the Union's
statement of intent, the proposal "only requires that any time spent be
separately accounted for, not that it would be subtracted from examining time."
Id. at 61.

3. Proposal 23 Affects the Exercise of Management's Right to Assign
Work Under Section 7106(a)(2)(B) of the Statute

A proposal affects management's right to assign work if the proposal
requires management to assign duty time for a particular task. See,
e.g., American Federation of Government Employees, Local 2077 and U.S.
Department of Defense, Michigan Air National Guard, 127th Tactical Fighter
Wing, 43 FLRA 344, 359 (1991) (proposal requiring an agency to permit
employees to use duty time for physical fitness activities directly affects the
agency's right to assign work); American Federation of Government Employees,
Local 1513 and U.S. Department of the Navy, Naval Air Station, Whidbey Island,
Oak Harbor, Washington, 41 FLRA 589, 594 (1991) (proposal requiring agency
to dispatch an individual to obtain food for employees performing overtime
directly affects management's right to assign work). However, the Authority
will not find that a proposal affects management's rights when the use of time
is merely incidental to the proposal. SeeAmerican Federation of
Government Employees, Local 3407 and U.S. Department of Defense, Defense
Mapping Agency, Hydrographic-Topographic, Washington, D.C., 39 FLRA 557,
564-66 (1991) (a proposal will not be found outside the duty to bargain solely
because its implementation results in the use of employees' time). The
Authority also will not find that a proposal affects management's right to
assign work when the proposal requires only that management maintain specific
information, and does not dictate how management will use that information.
See, e.g., American Federation of Government Employees, Local 2879
and U.S. Department of Health and Human Services, Social Security
Administration, Chula Vista District, San Diego, California, 38 FLRA
244, 253-54 (1990) (finding that a provision requiring an agency's review
procedures to reflect employee absences did not directly interfere with
management's rights) (HHS, Chula Vista).

As described above, Proposal 23 would permit examiners to fulfill
financial disclosure and conflict of interest requirements during duty time. In
fact, there is no dispute between the parties that the use of duty time for
this purpose is directly authorized under the proposal. Thus, the use of duty
time is not incidental to the implementation of Proposal 23. In addition,
Proposal 23 does not require only that a record of time spent fulfilling
financial disclosure and conflict of interest requirements be maintained; it
also permits the use of time to do so. Accordingly, HHS, Chula Vista and
other similar decisions do not apply. As such, Proposal 23 affects management's
right to assign work under section 7106(a) of the Statute.

4. Proposal 23 Constitutes an Appropriate Arrangement Under Section
7106(b)(3) of the Statute

We conclude that, consistent with the Union's argument, it is
foreseeable that the time spent fulfilling disclosure and conflict requirements
may have an adverse effect on examiners' performance ratings. It is undisputed,
in this regard that examiners' work "performance is measure[d] in 6 minute
increments[.]" Reply Brief at 61. Thus, the time required to prepare a
disclosure statement could affect an examiner's ability to maintain required
productivity. This adverse effect flows not only from the obligation to fulfill
these requirements, which results from the Agency's application of OGE
regulations to examiners, but also from the exercise of management's right to
assign work and direct employees by establishing performance standards.

We also conclude that Proposal 23 is sufficiently tailored. In this
regard, "[p]roposals that are prophylactic in nature, in that they are intended
to eliminate the possibility of an adverse effect, may constitute appropriate
arrangements negotiable under section 7106(b)(3)." Patent and Trademark
Office, 49 FLRA at 191. As explained by the Union, Proposal 23 is
intended to address the foreseeable adverse effect on performance evaluations
resulting from the time spent fulfilling financial disclosure and conflict of
interest requirements. Given the fact that performance evaluations are
conducted annually, it cannot be predicted with accuracy at the time the
disclosure forms are completed which particular examiners would be adversely
affected by the failure to account for their time spent complying with
disclosure requirements. Specifically, it cannot be predicted which examiners
will not be able to maintain productivity over the course of the performance
year unless the time they spend completing financial disclosure forms is taken
into account. Thus, the proposal acts as a prophylactic in that it prevents any
such adverse effect. Seeid. at 192-94. As such, Proposal 23
constitutes an arrangement within the meaning of section 7106(b)(3) of the
Statute.

In balancing the burden the proposal imposes on management's right
against the benefit to employees, it is relevant that all agencies are
encouraged to provide Federal employees with duty time to fulfill their
financial disclosure requirements. In this regard, the Director of OGE, in an
official document intended to offer guidance regarding financial disclosure
systems to Designated Agency Ethics Officials, stated that:

Some filers have complained that they are not permitted to prepare
their financial disclosure reports on official time. While the regulation does
not speak to this issue, [OGE] has advised them that, because completion of the
[financial disclosure forms] is a requirement of their Government position,
they should be allowed to use reasonable periods of official time, in amounts
to be determined by their agency [to complete such forms].

Stephen D. Potts, Director, United States Office of Government
Ethics, to Designated Agency Ethics Officials (Dec. 13, 1995). Thus, the
burden placed on the Agency by the proposal is one that the Agency "should"
already be shouldering. In contrast, the benefit to examiners of being assured
that they will have the ability to rebut a poor performance rating stemming
from the failure to maintain productivity, with information as to the time they
were required to spend fulfilling financial disclosure requirements, is
significant. As such, the burden Proposal 23 imposes on management's right is
outweighed by the benefit to examiners.

Accordingly, Proposal 23 does not excessively interfere with
management's right to assign work under section 7106(a)(2)(B) of the Statute.
Therefore, we find that it is an appropriate arrangement and conclude that it
is within the Agency's duty to bargain.

V. Proposals Alleged To Be Inconsistent With Government-Wide
Regulation(10)

A. Framework for Resolving The Allegations That Proposals Are
Inconsistent With Law or Government-wide Regulation

The Authority has recognized two distinct grounds for finding a
bargaining proposal outside the duty to bargain because it conflicts with a law
or Government-wide regulation. 5 U.S.C. 7117(a).

First, the Authority has consistently held that matters concerning
conditions of employment are subject to collective bargaining when they are
within the discretion of an agency and are not otherwise inconsistent with law
or applicable rule or regulation. See, e.g., International
Association of Machinists and Aerospace Workers, Franklin Lodge No. 2135 and
U.S. Department of the Treasury, Bureau of Engraving and Printing, 50 FLRA
677, 681-82 (1995) (Bureau of Engraving and Printing), aff'd mem.
sub. nom.Bureau of Engraving and Printing v. FLRA, No. 95-1499
(D.C. Cir. May 23, 1996). However, negotiation over the exercise of agency
discretion has been found to be outside the duty to bargain where a law or
regulation indicates that an agency's discretion is intended to be exercised
only by the agency -- referred to by the Authority as "sole and exclusive"
discretion. Id. at 682 n.8. SeealsoIllinois
National Guard v. FLRA, 854 F.2d 1396 (D.C. Cir. 1988) (National
Guard). In the absence of an indication in the wording or in the
legislative or regulatory history of a provision that the agency's discretion
is sole and exclusive, the Authority has found that it is not. SeeBureau of Engraving and Printing, 50 FLRA at 692; American
Federation of Government Employees, Local 3295 and U.S. Department of the
Treasury, Office of Thrift Supervision, 47 FLRA 884, 894-99 (1993),
aff'd 46 F.3d 73 (D.C. Cir. 1995); U.S. Department of Defense, Office
of Dependents Schools and Overseas Education Association,
40 FLRA 425, 441-43 (1991) (Overseas Education); Police
Association of the District of Columbia and Department of the Interior,
National Park Service, U.S. Park Police, 18 FLRA 348, 353 (1985).

Second, proposals have been found to be inconsistent with law or
regulation and, thus, outside the duty to bargain, where they mandate that an
agency apply a standard or procedure that is contrary to the law or
regulation.(11)SeeOverseas Education
Association, 40 FLRA at 441-43. The fact that an agency's discretion may be
bargained does not necessarily mean that the discretion is unlimited.
Id.

This second category of proposals found to conflict with law or
regulation is illustrated by several principles established in Authority
precedent.(12) For example, where a regulation
calls for a case-by-case determination as to whether the standard it
establishes has been met, the Authority has held that a proposal that, in
effect, made a blanket determination that the standard had been met was outside
the duty to bargain because it was inconsistent with the regulation. Seee.g., National Treasury Employees Union and Department of the
Treasury, U.S. Customs Service, 23 FLRA 681, 682-83 (1986)
(Customs Service). Such a requirement for a case-by-case determination
has been found explicitly in the regulation. Overseas Education, 40 FLRA
at 428-31 (regulation may "be waived by the head of the agency upon
determination that unusual circumstances in an individual case justify such
action"). This requirement has also been found to be stated implicitly. In this
regard, where a regulation requires consideration of specific criteria as
applied to particular facts, the Authority has interpreted it to require a
case-by-case determination. SeeCustoms Service, 23 FLRA
at 683 (finding regulation that prevents the disclosure of records where
it may "create an unfair advantage" or "compromise the utility" of the
selection process to incorporate a standard that must be applied to the
particular circumstances presented on a case-by-case basis).(13) In determining whether a
regulation requires a case-by-case determination, the Authority is guided by
the provisions of the regulation itself, the legislative intent of the statutes
that the regulation implements, and court decisions addressing the regulation
and those statutes. Overseas Education, 40 FLRA at 428-31,
441-43.

In addition, the Authority has found proposals to be inconsistent with
a regulation where the regulation states an express standard governing the
exercise of an agency's authority, and the proposal either expanded or
contracted that regulatory standard. See, e.g., American Federation
of Government Employees, AFL-CIO, Local 1458 and U.S. Department of Justice,
Office of the U.S. Attorney, Southern District of Florida, 29 FLRA 3, 4-5
(1987) (finding a proposal that contained a less rigorous standard -- "an
immediate risk to the employees' health and safety" -- than regulation's
"imminent risk of death or serious bodily harm" standard was outside the duty
to bargain) (U.S. Attorney).(14)

Finally, the Authority has found a proposal inconsistent with
regulation where the proposal precluded an agency from doing something it is
required to do under the regulation. For example, the Authority held outside
the duty to bargain a proposal precluding an agency from taking disciplinary
actions against employees who were found to use illegal drugs, because the
regulation provided that an agency is required to "initiate action to
discipline any employee who is found to use illegal drugs[.]" American
Federation of Government Employees, National Council of HUD Locals and U.S.
Department of Housing and Urban Development, 43 FLRA 1405, 1409-13
(1992) (HUD).(15)

B. Proposal 6

(a) A committee will be established to hear appeals if an examiner
disagrees with the designated SIC [Standard Industry Classification] codes for
the examiner's assigned industry sector(s) or with a particular company's
designation in an industry sector. The appeals committee will gather the
information necessary to apply the standards set forth in subsections b and c
below. Past practice in the art unit will not be precedential since any one
examiner may not be concerned with this issue. The appeals committee shall
issue a written decision which shall be precedential to the extent
circumstances have not changed.

(b) The fact that a company's total patents classified in a
particular class are less than 1% of its total patent portfolio and less than
1% of the total patents classified in that class will be prima facie evidence
that such company is not within the industry sector defined by/encompassed by
that class.

(c) A company shall be deemed to be within an industry sector if 10%
or more of the company's revenue is generated by activities within the industry
sector. Revenue of less than 10% will be prima facie evidence that such company
is not within the industry sector.

1. Positions of the Parties

a. Agency

The Agency contends that all three subsections of Proposal 6 are
inconsistent with 5 C.F.R. § 2635.403. According to the Agency, that
regulation vests the Agency's designee (the Ethics Division of the Office of
the General Counsel) with exclusive authority to determine whether financial
conflicts of interest exist. The Agency argues that longstanding Authority
precedent confirms that, where a Government regulation provides an agency with
decision making authority, proposals that limit that authority are outside the
duty to bargain.

The Agency also asserts that Proposal 6 would render 5 C.F.R.
§ 2635.403(b) "completely meaningless should the Agency be forced to
follow a Union-imposed framework, with set percentages, for determining which
companies pose financial conflicts of interest." Statement of Position at 17.
In support of its contention the Agency cites to Authority decisions finding a
proposal outside the duty to bargain because it modified a standard set forth
in regulation, or created a blanket determination that a regulatory standard is
met where the regulation calls for such determinations to be made on a
case-by-case basis. Id. at 17-18.

In addition, the Agency contends that subsection (a) of Proposal 6
would delay assignments of work or require that the work be assigned to another
examiner and, consequently, affects its right to assign work under
section 7106(a)(2)(B) of the Statute. The Agency argues that, when an
examiner appeals to the proposed committee, the examiner's supervisor "would
have to either hold the cases for that examiner in abeyance until the panel
reaches a decision, or attempt to find another examiner to handle the work."
Id. at 14. The Agency further asserts that subsection (a) does not
constitute an appropriate arrangement under section 7106(b)(3) of the Statute
because "it excessively interferes with management's right to assign work."
Id. at 15.

b. Union

The Union asserts that Proposal 6 is not inconsistent with
5 C.F.R. § 2635.403. In this regard, the Union claims that
section 2635.403(a) -- not 2635.403(b) -- applies to Proposal 6
because subsection (b) relates only to Agency determinations of "substantial
conflict." Reply Brief at 32. According to the Union, a substantial conflict
"rarely arises in the patent examination process because . . . it is unlikely
that an examiner's action could have a direct and predictable impact on his
financial interests."(16)Id. The Union asserts that Proposal 6 "is
intended to be a procedure pursuant to [section 2635.403(a)] in that it
establishes and implements general rules for regulating financial interests . .
. ." Id. However, the Union claims that the Agency's authority under
either subsection (a) or (b) of the regulation is not "exclusive" and, as a
result, may be exercised through collective bargaining. Id. The Union
notes that subsection (c) of the proposal "was modeled on" the existing
regulations of the Food and Drug Administration. Id.

In response to the Agency's management's rights claims, the Union
asserts that Proposal 6 does not concern the assignment of work. According to
the Union, the proposal "merely applies to the determination of what
constitutes a correct description of the employee's assigned work and what
companies fall within the scope of that description."
Id. at 33. The Union asserts, in this regard, that proposals
establishing joint labor-management committees are negotiable. In addition, the
Union contends that the proposal is negotiable under section 7106(b)(3) as
an appropriate arrangement for examiners who otherwise would be adversely
affected by possible Agency errors in identifying industry codes.

2. Meaning of the Proposal

Proposal 6 provides a method for resolving disputes over the Standard
Industry Classifications (SICs) that describe the types of companies included
in an examiner's art unit. The same process would be used to resolve disputes
over whether a particular company falls within a specific industry code. As
these codes are used to identify those holdings which are subject to regulatory
prohibition as potential conflicts of interest, the determination at issue does
not relate to individual determinations of actual conflict of interest of a
particular examiner with specific holdings and assignments. Consistent with the
Union's statements, we construe subsection (a) of the proposal as
establishing a joint labor management committee to resolve disputes arising
from an examiner's disagreement with codes assigned to the examiner's unit or a
particular company. The joint labor committee would be required to gather
information necessary to apply the standards set forth in subsections (b) and
(c), and to issue a written decision on the matter. Nothing in Proposal 6
indicates that committee decisions are final and binding on the Agency.

Subsections (b) and (c) provide, respectively, that prima facie
evidence that a company is not within a particular industry sector will exist
provided: (1) the company's total patents in a particular class are less than 1
percent of its total patent portfolio and less than 1 percent of the total
patents classified in that class; and/or (2) less than 10 percent of the
company's revenue is generated by activities within the industry sector. Thus,
it creates two rebuttable presumptions to assist the committee in determining
whether a company is within an industry sector.

3. Proposal 6 Is Not Inconsistent with 5 C.F.R.
§ 2635.403

a. 5 C.F.R. § 2635.403

Subsections (a) and (b) of 5 C.F.R. § 2635.403 set forth,
respectively, requirements applicable to: (a) the issuance of agency
regulations prohibiting the acquisition or holding of financial interests by
all or a class of agency employees; and (b) agency determinations to
prohibit individual employees from acquiring or holding financial
interests. By their plain terms, subsections 403(a) and (b) pertain to
different prohibitions: subsection 403(a) pertains to regulatory
prohibitions applicable to all or a class of agency employees; subsection
403(b) pertains to specific prohibitions applicable to individual
employees.

In addition, different standards apply to the prohibitions under
subsections 403(a) and (b). Under subsection 403(a), "an agency may" issue
regulations that prohibit the acquisition or holding of financial interests
"based on the agency's determination" that:

the acquisition or holding of such financial interests would cause a
reasonable person to question the impartiality and objectivity with which
agency programs are administered.

Under subsection 403(b), "an agency may" prohibit an individual employee
from acquiring or holding financial interests based upon "the agency designee's
determination" that such acquisition or holding will:

(1) require the employee's disqualification from matters so central
or critical to the performance of his official duties that the employee's
ability to perform the duties of his position would be materially impaired;
or

(2) adversely affect the efficient accomplishment of the agency's
mission because another employee cannot be readily assigned to perform work
from which the employee would be disqualified by reason of the financial
interest.

Thus, subsections 403(a) and (b) relate to different prohibitions
resulting from the application of different standards.

c. The Agency's Authority Under § 2635.403(b) Is Not Sole
and Exclusive

The Union asserts that Proposal 6 is intended to establish and
implement "general rules" under 5 C.F.R. § 2534.403(a), rather than
specific determinations under subsection 403(b). The Agency responds that the
appeals panel and the presumptions, i.e., the prima facie
evidence standards established in the proposal, are inconsistent with its
exclusive authority to determine whether conflicts of interest exist. According
to the Agency, subsection 403(b) "clearly states that the determination of
whether a conflict exists rests exclusively with 'the agency designee.'"
Statement of Position at 16-17 (emphasis in original).

Contrary to the Agency's statement, subsection 403(b) does not
establish that the Agency's authority is "exclusive." Both subsections 403(a)
and (b) state only that an "agency may" prohibit or restrict the acquisition or
holding of financial interests. The fact that the agency "may," under
subsection 403(b), prohibit or restrict financial interests based on the
designee's determination, does not preclude compliance with whatever limits
exist on the agency's discretion. This includes limits established through
collective bargaining. SeeBureau of Engraving and Printing, 50
FLRA at 691-92.

We note, in this regard, that other sections of the OGE regulations
specify that certain authorities are to be exercised solely by one official.
See, e.g., 5 C.F.R. § 2634.203 (an individual may be
excluded from financial disclosure requirements "when the Director of the
Office of Government Ethics determines, in his sole discretion, that such
exclusion would not affect adversely the integrity of the Government or the
public's confidence in the integrity of the Government"); 5 C.F.R.
§ 2634.406 (the term "independent trustee" means an entity that "is
determined by the Director of the Office of Government Ethics and in the
Director's sole discretion" to meet certain requirements); 5 C.F.R.
§ 2634.902(d) (section 107 of the Ethics in Government Act of 1978
"leaves no discretion" with agencies with respect to disclosure to the public
of confidential reports). Because such exclusivity is made clear in other parts
of the OGE regulations, we conclude that the authority in sections (a) and (b)
of 5 C.F.R. § 2635.403 is not intended to be exclusive. Cf.Russello v. United States, 464 U.S. 16, 23 (1983) (Congress' inclusion
of particular language in one section of a statute and omission of it from
another implies an intent to deal with the two sections disparately).

Based on the foregoing, we conclude that the Agency's authority
pursuant to 5 C.F.R. § 2635.403(b) is not sole and exclusive.

Our conclusion that the Agency's discretion under 5 C.F.R.
§ 2635.403 is not sole and exclusive does not mean that the
discretion is unlimited under that regulation. SeeBureau of
Engraving and Printing, 50 FLRA at 691-92. For example, the Agency could
not be required to bargain over a proposal that precluded it from prohibiting,
through regulation, acquiring or holding a financial interest that would "cause
a reasonable person to question the impartiality and objectivity with which
agency program are administered." 5 C.F.R. § 2635.403(a). SeeIRS, 902 F.2d at 1001. Similarly, the Agency could not be required to
bargain over a proposal that would preclude it from prohibiting a "substantial
conflict," as set forth in 5 C.F.R. § 2635.403(b). Id.

Proposal 6, however, does not include any standard for
determining conflicts of interest under either subsection 403(a) or subsection
403(b). Instead, it simply provides a procedure and standards for determining
whether specific industries or companies fall within the scope of a unit's
work. Nothing in the proposal releases the Agency from following the standards
set by the regulations.

The Agency does not support its argument that the standards set forth
in Proposal 6 are inconsistent with subsection 403(b).(17) There is nothing in the proposal
that would interfere in any way with subsection 403(b)'s standards for the
Agency to determine that there is a substantial conflict of interest in
individual cases. The determination of what companies and SICs fall within an
art unit is used to determine the zone of the regulatory restriction on all of
the employees in the unit. The Agency's ability to prescribe the acquisition of
broad categories of investments under subsection 403(a) is independent of its
right to determine that a specific interest creates a conflict of interest for
a particular individual employee under subsection 403(b). The fact that the
aquisition or holding of a particular interest has not been prohibited in
advance under 403(a) does not preclude the Agency from finding an individual
conflict under 403(b). As we find that Proposal 6 has no bearing on individual
determinations under subsection 403(b), it is not inconsistent with that
subsection.

Thus, nothing in Proposal 6 would prevent the Agency from making the
required determinations on a case-by-case basis. In this regard, the proposal
does not create a blanket determination as to whether a substantial conflict
will be found where the appeals committee determines an examiner's assigned
industry code, a particular company's designation, or where the percentages in
the proposal are met. The Agency retains its ability to review an individual
examiner's holdings and apply the standards set forth in regulation on a
case-by-case basis. As such, the appeals committee and the rebuttable
presumptions in the proposal are simply methods to assist the Agency in making
such determinations.

Further, the proposal does not prescribe a standard that is
inconsistent with the standards set forth in the regulation. Specifically, the
proposal does not expand or contract the standard of what constitutes a
"substantial conflict" under 5 C.F.R. § 2635.403(b) because the
Agency may still find that a substantial conflict of interest exists.
Cf.U.S. Attorney, 29 FLRA at 4-5. In addition, the presumptions
set forth in the proposal are rebuttable and the decision of the appeals
committee is not final or binding. SeeDepartment of the Army, U.S.
Army Aberdeen Proving Ground Installation Support Activity v. FLRA, 890
F.2d 467, 476 (D.C. Cir. 1989) (finding a proposal creating a rebuttable
presumption consistent with regulation providing that agency is given sole and
final authority to make the determination because it "affirm[ed] the parameters
of the [agency's] inquiry set out therein"). Thus, the final decision making
authority remains with the Agency.

Based on the foregoing, we conclude that Proposal 6 does not preclude
the Agency from making a determination on a case-by-case basis that a
substantial conflict of interest exists. Accordingly, Proposal 6 is not
inconsistent with 5 C.F.R. § 2635.403(b).

4. Proposal 6, Subsection (a) Does Not Affect Management's Right to
Assign Work

As a general rule, the establishment of a joint committee that
identifies and resolves labor-management issues is within the duty to bargain.
See, e.g., National Federation of Federal Employees, Local 1482 and
U.S. Department of Defense, Defense Mapping Agency, Hydrographic/Topographic
Center, Washington, D.C., 44 FLRA 637, 674 (1992). In particular,
proposals that establish joint labor-management committees to make
recommendations concerning conditions of employment have been found to be
within the duty to bargain. See, e.g., International Organization of
Masters Mates and Pilots, Marine Division, Panama Canal Pilots Branch and
Panama Canal Commission, 51 FLRA 333, 349 (1995). However, insofar as
a joint committee is involved in discussions and deliberations involving the
exercise of management's rights under section 7106 of the Statute, proposals
that provide for union participation on the committee directly interfere with
those rights. SeeAmerican Federation of Government Employees, Local
1923 and U.S. Department of Health and Human Services, Health Care Financing
Administration, Baltimore, Maryland, 44 FLRA 1405, 1442 (1992).

Contrary to the Agency's claims, the record reflects that the joint
committee that would be created by Proposal 6 is intended to serve only as a
forum for evaluating the correctness of the SIC codes. Nothing in the wording
of Proposal 6, or the Union's statement of intent, directs the Agency to assign
work to any particular individual or to refrain from assigning work to a
particular individual. In addition, the Agency does not argue that the proposal
has that effect. The proposal addresses only the description of the employee's
work and the companies that fall within the scope of that description.

An appeal to the committee opens an investigative process in which the
committee gathers facts to be submitted to the management official before the
Agency determines whether a conflict exists. However, when a potential conflict
of interest is identified, the Agency has the sole discretion to determine what
action is to be taken to resolve the conflict. Therefore, contrary to the
Agency's assertions, there is nothing in the proposal that requires the Agency
to place work assignments in abeyance. Such a determination is left solely to
the discretion of management consistent with the regulations.

Based on the foregoing, we conclude that Proposal 6 does not affect
management's right to assign work under section 7106(a)(2)(B) of the Statute
and, as Proposal 6 is not inconsistent with 5 C.F.R. § 2635.403, it is
within the Agency's duty to bargain.

C. Proposal 19

Waiver of apparent conflicts of interest shall be granted when the
value of a financial interest is so small it is extremely unlikely that the
decision-making process will be compromised. The financial interest shall be
considered sufficiently small to meet this criterion when:

(a) the anticipated financial impact of the examiner's decision will
affect the examiner's personal wealth by less than 1% of the examiner's annual
base salary; and/or

(b) the anticipated financial impact on the assignee [of the patent]
represents less than one tenth of 1% of the greater of the assignee's assets or
income.

1. Positions of the Parties

a. Agency

The Agency contends that, by requiring a "blanket waiver" of conflicts
where the financial interests involved meet the specified criteria, the
proposal is inconsistent with 5 C.F.R. § 2635.402(d)(2)(ii).
Statement of Position at 36. The Agency claims that such determinations must be
made on a case-by-case basis after considering the particular circumstances in
each case. The Agency also argues that the determination of when such a waiver
is appropriate "rests solely with the Agency official authorized to issue
waivers . . . ." Id. at 35.

b. Union

The Union asserts that Proposal 19 provides for "automatic waiver of an
apparent conflict of interest if the amount at interest is less than the
amounts defined by subsections" (a) and (b). Reply Brief at 53. The Union
states that, throughout negotiations, the Agency asserted that a financial
interest "as small as 1 cent" would be too much to grant a waiver. Id.
According to the Union, the Agency's position is "extreme" and is inconsistent
with 5 C.F.R. § 2635.402(d)(2). Id. The Union claims that the
regulation applies to financial interests that are directly affected by an
examiner's actions and that, as Proposal 19 applies only to interests "which
are so small that it would be extremely unlikely to compromise the
decision-making process[,]" the proposal does not fall within the scope of the
regulation. Id. at 54.

The Union also contends that 5 C.F.R. § 2635.402 "is intended to
apply to 'disqualifying financial interests' which are the kinds of interests
which, if they conflicted with the employee's duties could result in criminal
prosecution." Id. The Union contends that, on the other hand, 5 C.F.R.
§ 2635.403 "is concerned with 'prohibited financial interests' which
have a less direct relationship with the employee's duties[.]" Id. The
Union claims that Proposal 19 is intended to constitute a procedure under 5
C.F.R. § 2635.403 "to expand the financial interests which an employee is
prohibited from acquiring or holding." Id.

2. Meaning of the Proposal

Proposal 19 requires an automatic waiver of a conflict of interest
when: (1) the anticipated impact of an examiner's decision will affect the
examiner's wealth by less than 1 percent of the examiner's base salary;
and/or (2) the impact on the owner of the patent application being examined is
less than one-tenth of 1 percent of the owner's assets or income. The criteria
establishes, in effect, the standards that, if met, would satisfy the
requirements set forth in 5 C.F.R. § 2635.402(d)(2)(ii).(18) With respect to point (2),
section (b) of the proposal refers to "the assignee." The Union asserts in its
petition for review, and the Agency does not dispute, that the term "assignee"
means the owner of the patent application being examined. We construe it
accordingly.

participating personally and substantially in an official capacity in
any particular matter in which, to his knowledge, he or any person whose
interests are imputed to him . . . has a financial interest, if the particular
matter will have a direct and predictable effect on that
interest.

The regulation states four requirements that must be met for an employee
to be prohibited from participating in a matter: (1) the employee participation
must be personal, substantial, and in an official capacity; (2) the
participation must relate to a "particular" matter; (3) the particular matter
must be one in which the employee or someone whose interests are imputed to the
employee has a financial interest of which the employee has knowledge; and (4)
the particular matter must be one that will have a direct and predictable
effect on the financial interest.

Where these requirements are satisfied, then the employee "shall
disqualify himself from participating" in the matter unless: (1) employee
participation is authorized by virtue of a waiver; or (2) the financial
interest has been divested. Waivers are addressed in 5 C.F.R. §
2635.402(d), which provides for two types of waivers: regulatory waivers of
general applicability issued by the Office of Government Ethics; and individual
waivers issued by a particular agency. With respect to individual waivers, 5
C.F.R. § 2635.402(d)(2) provides:

An individual waiver enabling the employee to participate in one or
more particular matters may be issued . . . if, in advance of the employee's
participation:

(i) The employee:

(A) Advises the Government official . . . about the nature . . .
of the particular matter . . . ; and

(B) Makes full disclosure . . . of the nature . . . of the
disqualifying financial interest;
and

(ii) Such official determines . . . that the employee's financial
interest in the particular matter . . . is not so substantial as to be deemed
likely to affect the integrity of the services which the Government may expect
from such employee.

We construe Proposal 19 to require the Agency to issue individual
waivers under 5 C.F.R. § 2635.402(d)(2) of any conflict arising from
financial interests meeting the criteria of the proposal.(19)

b. Proposal 19 Sets Standards For A Waiver Of Conflicts Of Interest
That Are Inconsistent With § 2635.402

The Agency argues, as it does throughout this case, that its authority
under 5 C.F.R. § 2635.402 "rests solely with the Agency official
authorized to issue waivers . . . ." Statement of Position at 35. As discussed
in regard to Proposal 6 and other sections of the OGE regulations, nothing in
the plain wording of 5 C.F.R. § 2635.402 supports a conclusion that the
authority to determine waivers is exclusive with the Agency. However, as we
also discussed in connection with Proposal 6, our finding that the authority is
not exclusive does not mean that it is unlimited.

The Agency argues that the blanket waiver of conflicts of interest set
forth in Proposal 19 is inconsistent with 5 C.F.R. §
2635.402(d)(2)(ii). As explained above, that section provides that an
individual waiver may be issued where an employee advises the Agency about the
nature of the "particular matter," makes full disclosure of the nature of the
disqualifying financial interest, and the Agency makes a determination "that
the employee's financial interest in the particular matter . . . is not so
substantial as to be deemed likely to affect the integrity of the services
which the Government may expect from such employee." 5 C.F.R.
§ 2635.402(d)(2)(ii).

The regulatory requirement that the Agency make a determination based
on the "particular matter" requires the Agency to scrutinize the examiner's
particular financial interest, the particular patent application, the company,
and the industry involved. We interpret this to require that a waiver be
granted only on a case-by-case basis. SeeDepartment of Justice,
727 F.2d at 489-90.

Proposal 19 also provides in subsection (b), in effect, that the
regulatory standard is met where "the anticipated financial impact on the
assignee [of the patent] represents less than one tenth of 1% of the greater of
the assignee's assets or income." Thus, the proposal requires that the Agency
grant a waiver of a conflict of interest based solely on the assignee and
without regard to the "particular matter" and its impact on the employee as
required by 5 C.F.R. § 2635.402(d)(2)(ii). As such, we conclude that
Proposal 19 is inconsistent with section 2635.402(d)(2)(ii). SeeHUD, 43 FLRA at 1409-13.

Based on the foregoing, we conclude that Proposal 19 sets standards for
waiver of conflicts of interest that are inconsistent with 5 C.F.R.
§ 2635.402, and thus, is outside the Agency's duty to bargain.

D. Proposal 18

Whereas, it is Department of Commerce policy to construe a $25,000 or
less interest in a specific company as small enough to warrant a waiver with
respect to policy decisions for the industry for which the company is a member,
examiners shall be allowed to own $25,000 total in industry specific mutual
funds which fall within the scope of the examiner's assigned industry sectors.
The impact on the industry as a whole would be the equivalent of the impact of
a policy making decision on a specific company. Industry specific mutual funds
which fall outside of the examiner's assigned industry sectors will not be
subject to any monetary limitations.

1. Positions of the Parties

a. Agency

The Agency argues, as it did with respect to Proposal 6, that it has
exclusive authority under 5 C.F.R. § 2635.403(b) to determine whether
conflicts of interest exist. According to the Agency, Proposal 18 conflicts
with that regulation because it would "flatly prohibit" the Agency from
determining that a conflict exists based on an examiner's holding of the
interests specified in the proposal: $25,000 or less of industry specific
mutual funds involving industries which fall within the scope of an examiner's
assigned industry sector; and an unlimited amount of industry specific mutual
funds that do not fall within such scope. In addition, the Agency claims
that:

industry-specific mutual funds can affect the industry as a
whole. The grant of a patent can affect the stock of the company that receives
the patent, as well as the stock of the company's competitors. Consequently,
the Agency has determined that a financial interest in industry-specific mutual
funds may constitute a conflict of interest, depending upon the circumstances
of the case.

Statement of Position at 33-34 n.12.

The Agency also argues, as it did with respect to Proposal 6, that
Proposal 18 would render 5 C.F.R. § 2635.403(b) "meaningless if the
Agency were required to adhere to a Union-imposed amount for determining when
industry specific mutual funds would pose a financial conflict of interest."
Id. at 33. Further, the Agency asserts that because "industry-specific
mutual funds can affect the industry as a whole[]" and because it has
determined that such mutual funds "may constitute a conflict of interest,
depending upon the circumstances of the case," a waiver of such conflict is
inappropriate. Id. at 33-34 n.12 (emphasis in original). In support of
its contention, the Agency cites Authority cases holding that a proposal is
outside the duty to bargain if the proposal creates a blanket determination
that a regulatory standard is met where regulation calls for such
determinations to be made on a case-by-case basis. Id. at 34.

b. Union

The Union asserts that Proposal 18 is intended to permit examiners
to own: (1) as much as $25,000 in any industry-specific "mutual fund falling
within the scope of their assigned technology[]"; and (2) "any amount of
industry specific sector mutual funds that fall outside of their assigned
technology." Petition for Review at 12. According to the Union:

The Department of Commerce has granted a waiver to public filers for
ownership of as much as $25,000 in a specific company because the decisions
that the public filer makes would affect an entire industry and would have a
minimal effect on any one company in the industry. The proposal seeks to
provide confidential filers with an equivalent waiver.

Reply Brief at 52.

With respect to 5 C.F.R. § 2635.403, the Union makes the same
argument it made in connection with Proposal 6. Specifically, the Union
contends that Proposal 18 is intended to establish a procedure under section
(a) of the regulation, and that section (b) of the regulation does not apply
because that section of the regulation prohibits "the kind of interest that
rarely arises in the patent examination process . . . ." Reply Brief
at 51. In addition, according to the Union, even if section (b) applies,
Proposal 18 is within the duty to bargain because the Agency's authority under
section (b) is not exclusive.

2. Meaning of the Proposal

The proposal provides a blanket waiver of a conflict of interest where
the conflict exists because an examiner owns up to $25,000 in an
industry-specific mutual fund involving industries that fall within their
assigned industry sectors, and where an examiner owns any amount of
industry-specific mutual funds that do not fall within those sectors. The Union
asserts, and the Agency does not dispute, that:

Industry specific mutual funds are those which invest substantially
all of the fund's money in publicly traded shares of companies falling within a
narrow segment of the economy, such as biotechnology, health care, automobiles,
or heavy construction equipment.

Petition for Review at 12.

3. Proposal 18 Is Inconsistent With 5 C.F.R.
§ 2635.402(d)(2) Because It Creates a Blanket Standard For Waiver Of
a Conflict Of Interest

For the reasons previously stated in connection with Proposal 6, we
conclude that the Agency's authority is not exclusive under either section (a)
or (b) of 5 C.F.R. § 2635.403. Seesupra Section
V, B, 3, c.

As discussed above, Proposal 18 provides that the Agency will grant an
individual waiver of conflicts of interest set forth in the proposal if and
when they exist.(20) Thus, the language of the proposal specifically directs our
inquiry of the legality of the proposal to the regulatory provision,
5 C.F.R. § 2635.402(d)(2). Although not expressly relied upon by
the Agency in its discussion of Proposal 18, the Agency does address subsection
402(d)(2) elsewhere in its submission to the Authority, and it was necessary to
analyze this regulation in determining the negotiability of Proposal 19.
Seesupra Section V, C, 3. Because its applicability to Proposal
18 is beyond peradventure, we address subsection 402(d) in analyzing the
negotiability of Proposal 18 as well.

5 C.F.R. § 2635.402(d)(2) authorizes an agency to issue an
individual waiver of a conflict of interest. Such a waiver may be granted only
where an employee has complied with certain disclosure requirements and the
Agency determines "that the employee's financial interest in the particular
matter . . . is not so substantial as to be deemed likely to affect the
integrity of the services which the Government may expect from such employee."
5 C.F.R. § 2635.402(d)(2)(ii). As discussed in connection with
Proposal 19, the regulatory requirement that the Agency make a determination
based on the "particular matter" requires the Agency to examine all the facts
concerning the specific conflict of interest, including among other things the
examiner's interest and the particular patent application and the company or
companies involved.

Proposal 18 would create a blanket determination that the standard set
forth in section 2635.402(d)(2)(ii) is met where a conflict of interest is the
result of a financial interest of $25,000 or less in an industry specific
mutual fund. As such, the proposal requires that the Agency grant an individual
waiver based solely on the amount and type of the interest held by an examiner
without regard to other necessary considerations. Specifically, the proposal
would require a waiver be granted without regard to the particular examiner,
the particular patent application and particular company or companies involved.
Thus, Proposal 18 is inconsistent with section 2635.402(d)(2)(ii) of the
regulation.

Based on the foregoing, we conclude that Proposal 18 creates a blanket
standard that is inconsistent with 5 C.F.R. § 2635.402(d)(2)(ii) and,
as such, is outside the duty to bargain.(21)

E. Proposals 9 and 12

Proposal 9

(a) In the event that an application is assigned to an examiner that
is not typical of those found in the assigned industry sector(s), recusal or
waiver, at the sole discretion of management, will be the remedy for any
possible conflicts of interest based on the examiner's pre-existing financial
interests.

(b) In the event temporary transfers of work create a conflict of
interest based on an examiner's pre-existing financial interests, recusal or
waiver, at the sole discretion of management, will be the remedy for any
possible conflicts of interest based on the examiner's pre-existing financial
interests.

(c) In all other situations, the Office will normally require the
examiner to divest the financial interest causing the conflict.

Proposal 12

In the event that a conflict of interest arises due to an examiner's
or an examiner's spouse's vested interest in a company-sponsored retirement
plan, and the examiner or their spouse is no longer employed by the company,
waiver shall be the remedy, recognizing it is to the Office's benefit to
recruit and retain examiners with technical experience in the arts in which
they examine. Notwithstanding the prior sentence, when a company sponsored
retirement plan contains investments over which the employee has control, the
examiner shall be required to switch investments to the extent possible in
order to avoid conflicts.

1. Positions of the Parties

a. Agency

The Agency asserts that Proposals 9 and 12 are inconsistent with 5
C.F.R. § 2634.605, which addresses Agency review of financial
disclosure statements. According to the Agency, all of the "remedial actions"
identified in the regulation must be available to remedy any conflicts
identified on the statements.(22) Statement of Position at 23. The Agency claims that the
official who reviews the statements has authority to determine that "any
of the seven options" is appropriate. Id. (emphasis in original).
According to the Agency, by limiting the available remedial options to waiver
or recusal for the situations identified in Proposal 9, and to waiver for the
situation in Proposal 12, the proposals are inconsistent with the regulation.
The Agency also asserts that the proposals are inconsistent with regulation
because the determination as to "what remedial action, if any, is necessary
[because of a conflict of interest], [must be] based on a thorough
consideration of all of the circumstances of each particular case."
Id. (emphasis in original).

b. Union

The Union states that Proposal 9 is intended to apply to "unusual
situation[s]" where conflicts with an examiner's preexisting financial
interests arise because of atypical or temporary assignments of work. Reply
Brief at 39. The Union asserts that, in those situations, the proposal provides
that, "at management's discretion, the conflict will be resolved by either the
examiner recusing himself from working on the application or by management
granting a waiver so that the examiner may work on the application presenting
the potential conflict." Id. The Union claims that "[t]he essence of
[Proposal 9] is that the employee will not be required to divest the financial
interests." Id.

According to the Union, Proposal 9 does not conflict with 5 C.F.R.
§ 2634.605. The Union claims, in this regard, that the remedial
actions listed in 5 C.F.R. § 2634.605(b)(5) are available to "the agency
reviewing official." Reply Brief at 39. In particular, the Union claims:

In the Department of Commerce, the reviewing official has been
designated to be the Office of the General Counsel at the Department level.
Proposal 9 is intended to be a procedure for resolving temporary conflicts of
interest at the level of recognition of our bargaining unit. If the proposal is
followed within the [Patent and Trademark Office], then there would be no
conflict of interest which would require a remedy at the Department
level.

Id.

The Union asserts that Proposal 12 addresses the situation "in which a
company employee having knowledge of a particular 'art' . . . acquired in the
course of that employment leaves that company and begins working" at the Agency
while, at the same time, holds an interest in the stock of the former employer
through a vested pension or retirement fund. Id. at 44. The Union claims
that the Agency has "purposefully recruited examiners with skills in critical
areas from among ex-employees of companies operating in these critical areas
knowing full well that those employees had vested pension rights . . . ."
Id. The Union claims that, by requiring the Agency to waive the conflict
of interest resulting from the vested pension rights, Proposal 12 does not
conflict with 5 C.F.R. § 2634.605 because "the only viable remedy in
the[se] circumstances . . . is waiver." Reply Brief at 44.

2. Meaning of the Proposals

Proposals 9 and 12 specify the only actions that the Agency would be
permitted to take when conflicts of interest arise in certain situations. The
Union asserts, in this regard, that both proposals concern "potential"
conflicts. Id. at 39, 44. However, it is clear from the wording of the
proposals and the Union's statement of intent, that both proposals address
apparent conflicts that arise as a result of actualassignments
of work, and we so construe the proposals. In this regard, section (a) of
Proposal 9 specifically applies after "an application is assigned to an
examiner . . . ." Similarly, the Union's statement of intent regarding Proposal
12 references an employee who "begins working . . . as an examiner in the same
technology" as that in a previous position. Id. at 40. Moreover, both
the term "recusal," for which the synonym "disqualification" is given in
5 C.F.R. § 2634.605(b)(5)(ii)(F), and the term "waiver" appear
more naturally to address apparent -- not potential -- conflicts.(23)

Proposal 9 addresses conflicts that arise because an examiner is
assigned work that is either: (1) "not typical" of work in the examiner's
assigned industry sector; or (2) the result of a temporary transfer of work.
Proposal 9 would permit such conflicts to be resolved only by recusal or
waiver. Proposal 12 addresses conflicts that arise because of an examiner's
vested interest in a pension or retirement fund. Proposal 12 would permit such
conflicts to be resolved only by waiver.

The issue raised by the Agency's argument is whether Proposals 9
and 12, which specify the actions to be taken when conflicts of interest arise,
are inconsistent with 5 C.F.R. § 2634.605.(24)

5 C.F.R. § 2634.605 addresses, by its terms, review of financial
disclosure reports.(25) Under the regulation, if "the reviewing official" determines
that the information disclosed in a statement reveals that the filer is not in
compliance with applicable laws and regulations, the official must notify the
filer "of the remedial action which is needed, and the date by which such
action should be taken." 5 C.F.R. § 2634.605(a)(4)(D). As set forth
at note 22, supra, those actions include, but are not limited to, waiver
and recusal.

Section 2634.605 refers to the regulations pertaining to those specific
remedies contained in Part 2635 and applies to all conflicts. See 5
C.F.R. §§§ 2635.402(c), 2635.402(d), 2635.403(b). Thus, it is
neccessary to address the Part 2635 remedial sections in analyzing the
proposals. These particular regulatory sections are addressed supra in
resolving the negotiability of other proposals, and it would be inappropriate
to ignore them here. See 5 C.F.R. § 2635.402(d)(2)
(Proposal 19).

a. The Agency's Authority Under 5 C.F.R. § 2634.605 Is Not
Sole and Exclusive

Nothing in the wording of 5 C.F.R. § 2634.605 refers to "exclusive
authority" of the Agency or the reviewing official to determine which remedial
action is appropriate in any individual situation. In addition, as noted
supra in regard to Proposal 6, other sections of these regulations
clearly indicate that other authorities are to be exercised at "the sole
discretion" of the subject official. In particular, a different subsection of
the same regulation involved here--5 C.F.R. § 2634.605--clearly
provides that the responsibilities set forth in that subsection are
"nondelegable." Compare 5 C.F.R. § 2634.605(b) with 5
C.F.R. § 2634.605(c) Note.(26)

Based on the foregoing we conclude,as we did above
with respect to Proposals 6, 18, and 19, that the Agency's authority to
determine what remedial action should be taken where a conflict of interest
exists is not sole and exclusive and, as a result, may be exercised through
collective bargaining provided the proposals are not otherwise outside the duty
to bargain. SeeBureau of Engraving, 50 FLRA at 691-92.

b. Proposal 12 Creates A Blanket Standard That Is Inconsistent With
Regulation

As discussed above, 5 C.F.R. § 2634.605(b)(5) provides seven
remedial actions that an Agency "may" take where a conflict exists, and it
includes both recusal and waiver. The regulation explicitly states that the
remedial action taken by the Agency "may include, as appropriate" any of the
seven actions. Thus, the Agency is given discretion to determine what an
"appropriate" remedy is in a particular situation.

However, in determining what an "appropriate" remedy is, the Agency
must establish that the criteria provided in section 2635.402 and section
2635.403, which set forth the standards for when actions such as
disqualification, waiver or divestiture is appropriate, have been met. Thus,
the "appropriate" remedy must be determined in conjunction with Part 2635. For
example, an agency may order divestiture only where the standards set forth in
5 C.F.R. § 2635.403(b) are met. Similarly, an agency is not
permitted to grant a waiver in a particular case unless the agency establishes
that the standard set forth in 5 C.F.R. § 2635.402(d)(2) for
granting an individual waiver has been met.

The standards for granting an individual waiver are set forth in
5 C.F.R. § 2635.402(d)(2). Seesupra
Section V, B, 3. Under the regulation, the Agency may issue a
waiver only where an employee has complied with certain disclosure requirements
and the Agency determines "that the employee's financial interest in the
particular matter or matters is not so substantial as to be deemed likely to
affect the integrity of the services which the Government may expect from such
employee." 5 C.F.R. § 2635.402(d)(2)(ii). In addition, the
regulation provides that the individual employee must comply with particular
requirements before a waiver can be granted. See 5 C.F.R.
§ 2635.402(d)(2)(i). Thus, this regulation provides for a
case-by-case determination for when an individual waiver is appropriate.

ii. Proposal 12

Proposal 12 would require the Agency to grant a waiver in specified
circumstances. As such, it is inconsistent with the case-by-case determination
required by § 2635.402(d)(2). SeeCustoms Service, 23
FLRA at 682-83. Moreover, Proposal 12 would require that an examiner be granted
a waiver without regard to whether the examiner had complied with the reporting
and disclosure requirements set forth in section 2635.402(d)(2)(i)(A) and (B).
Thus, the proposal would dictate that a waiver be granted where regulation
would prohibit granting the waiver. SeeIRS, 902 F.2d
at 1001. In addition, the proposal is inconsistent with section
2634.605(b)(5) because that section incorporates the individual standards set
forth in regard to each of the remedial action it authorizes.

Based on the foregoing, we conclude that Proposal 12 is inconsistent
with 5 C.F.R. §§ 2634.605(b)(5) and 2635.402(d)(2) and, as such, is
outside the duty to bargain.

c. Proposal 9 Creates A Standard That Is Not Inconsistent With
Regulation

In contrast, Proposal 9 would not require that the Agency grant an
individual waiver in situations where the standard set forth in 5 C.F.R. §
2635.402(d)(2) is not met. In circumstances where the regulatory waiver
standard is not met, the Agency would have the option under Proposal 9 to order
recusal. Therefore, the Agency would be permitted to review on a case-by-case
basis the individual employee's conflict and, based upon that inquiry,
determine whether waiver or recusal was appropriate.

In this regard, as discussed in regard to Proposal 18, we note that
nothing in the regulation requires that the Agency must order a particular
remedy. Specifically, section 2635.403(b) provides that an Agency "may" order
divestiture, and section 2635.402(d) provides that an Agency "may" grant a
waiver. Thus, where a waiver is not granted or divestiture does not occur,
recusal is the result contemplated by the regulation. 5 C.F.R. §
2635.402(c). The Agency does not assert, and the regulation does not provide,
that recusal is not always available as a remedy.

In sum, 5 C.F.R. parts 2634 and 2635 do not require an agency to order
a particular remedy, and Proposal 9 does not require the Agency to take actions
that the regulation does not authorize. The proposal also complies with the
regulation to the extent that an examiner would not be permitted to work where
a conflict of interest exists and waiver or divestiture has not occurred.
Cf.HUD, 43 FLRA at 1409-13. Thus, we conclude that Proposal 9 is
not inconsistent with 5 C.F.R. § 2634.605 and, as such, is
within the duty to bargain.

F. Proposal 10

In the event that the Office directs an examiner to divest financial
holdings as a result of a conflict created by an Office initiated action or
through an inadvertent mistake on the part of the examiner, the Office shall
provide such in writing and will allow 30 days for divestment, but not before a
requested Certificate of Divestiture has been granted or denied. For assets not
listed on an exchange, the Office shall allow 90 days for
divestment.

1. Positions of the Parties

a. Agency

The Agency argues that the determination as to reasonable time for
divestiture is within the Agency's exclusive authority under 5 C.F.R. §
2635.403(d). The Agency asserts that, to the extent that Proposal 10 restricts
its authority under the regulation to determine reasonable time frames and
"substitutes mandatory periods of time that conflict with the provisions of the
regulation, the proposal is nonnegotiable." Statement of Position at 25.
In this regard, the Agency claims that where a conflict of interest exists,
individual circumstances govern what may constitute a reasonable period of time
for divestment.

b. Union

The Union contends that Proposal 10 applies to situations where a
conflict arises from an Agency-initiated action or through an inadvertent
mistake by an examiner and the Agency requires the examiner to divest the
conflicting interest. According to the Union, the proposal:

provides that management will provide the examiner with a written
direction to [divest] . . . . If the examiner requests the Certificate,
the examiner shall be given 30 days (90 days if the assets are not listed
on an exchange) or until a reasonable time after the Certificate is granted or
denied, whichever is later, to divest . . . the assets.

Reply Brief at 41.

The Union argues that, under 5 C.F.R. § 2635.403(d), the Agency
has discretion to determine reasonable time periods for divestiture and that
discretion may be exercised through negotiations. Therefore, the Union asserts,
the proposal is not inconsistent with the regulation.

2. Meaning of the Proposal

Proposal 10 concerns directed divestiture of financial holdings when
the conflict requiring the divestiture is attributable either to
management-initiated action or an examiner's inadvertent error in acquiring a
financial interest. The proposal establishes certain time limits for
accomplishing divestiture. The specified time limits establish, in effect, what
constitutes a "reasonable period of time" for divestment under the applicable
regulation, 5 C.F.R. § 2635.403(d). Specifically, the proposal provides
that, for financial interests listed on an exchange, the time period for
divestiture will be 30 days or a reasonable time period after action is taken
on a request for a Certificate of Divestiture, whichever is longer. For assets
not listed on an exchange, the time period will be 90 days or a reasonable time
period after action is taken on a request for a Certificate of Divestiture,
whichever is longer.

3. Proposal 10 Is Not Inconsistent with 5 C.F.R.
§ 2635.403(d)

a. 5 C.F.R. § 2635.403(d)

Under 5 C.F.R. § 2635.403(d), an employee who is
directed to divest conflicting financial interests:

shall be given a reasonable period of time, considering the nature of
his particular duties and the nature and marketability of the interest, within
which to comply with the agency's direction. Except in cases of unusual
hardship, as determined by the agency, a reasonable period shall not exceed 90
days from the date divestiture is first directed. . . .

b. The Agency's Authority Is Not Sole and Exclusive Under 5 C.F.R.
§ 2635.403(d)

First, the Agency argues that the determination of a reasonable time
period for divestiture is within the exclusive authority of the Agency.
However, nothing in the plain wording of the regulation supports the Agency's
claim. In particular, the phrase "as determined by the agency" in the portion
of the regulation set forth above, which is relied on by the Agency to support
its argument regarding exclusive authority, applies to determinations of
unusual hardship, not determinations of time periods for divestiture. Thus,
Proposal 10 is not inconsistent with 5 C.F.R. § 2635.403(d) to the extent
that the Agency's authority is not sole and exclusive.

Contrary to the Agency's claims, nothing in 5 C.F.R.
§ 2635.403(d) indicates that the decision as to what constitutes a
"reasonable period of time" must be made on case-by-case basis. The factors to
be considered in making that determination are general and the regulation does
not call for any type of explicit determination. SeeDepartment of
Justice, 727 F.2d at 489-90; Customs Service, 23 FLRA
at 683.

In addition, it is not otherwise apparent that the time periods set
forth in the proposal are incompatible or inconsistent with the regulation.
SeeOverseas Education, 40 FLRA at 442. The regulation
provides that divestitures must be achieved within 90 days except in cases of
unusual hardship. Thus, the proposal's 30-day and 90-day time periods are
consistent with the regulatory limit. Moreover, Proposal 10, which establishes
different time periods depending on whether the interests to be divested are
listed on an exchange, is consistent with the regulation's reference to
marketability of interests.(27)

Based on the foregoing, we conclude that Proposal 10 is not
inconsistent with 5 C.F.R. § 2635.403(d), and, as such, is within the
Agency's duty to bargain.

G. Proposal 17

No examiner will be removed from the examining corps due to a
conflict with a financial interest that existed prior to employment, or due to
an Office initiated change of work assignment, unless the conflict was
knowingly concealed by the examiner during an inquiry by the
Office.

1. Positions of the Parties

a. Agency

The Agency argues that, by limiting management's authority to determine
appropriate remedies for conflicts of interest, Proposal 17 is inconsistent
with 5 C.F.R. § 2634.605. The Agency also argues that the
proposal affects the exercise of its right to discipline under section
7106(a)(2)(A) of the Statute because it "precludes the Agency from choosing
removal as a remedy for a conflict [of interest] resulting from a prior
financial interest or from an Agency-initiated change of work assignment,
unless the conflict was knowingly concealed by the examiner." Statement of
Position at 30-31. According to the Agency, the determination whether
discipline is justified and the "selection of the particular degree of
discipline -- in this case, removal due to a conflict of interest -- rests
exclusively with management." Id. at 31.

b. Union

The Union asserts that Proposal 17 is intended to protect employees
from removal "because of a conflict based on a disclosure made to management
prior to employment or prior to any change of work assignment[,] unless the
conflict was knowingly concealed from management." Reply Brief at 48. According
to the Union, the proposal does not affect management's right to discipline
employees because it only applies "when there is no wrongdoing on the part of
the employee." Id. at 49. Also according to the Union, if the proposal
affects management's right, then it is negotiable as an appropriate arrangement
under section 7106(b)(3) of the Statute. The Union argues, in this regard,
that the proposal does not excessively interfere with management's right
because it: (1) permits discipline other than removal in the situation covered
by the proposal; and (2) permits removal if there are other reasons, including
insubordination and knowing concealment of a financial interest, for the
action. The Union asserts that the proposal would protect employees from
managers who were "'out to get them[]'" by assigning work that caused a
conflict with a preexisting financial interest in order to justify a removal
action. Id. at 49-50.

The Union argues that Proposal 17 is not inconsistent with
5 C.F.R. § 2634.605 because removal of an employee is not listed
as an available remedy under that section.

2. Meaning of the Proposal

The proposal prohibits the Agency from removing an examiner based on a
conflict resulting from a financial interest held prior to employment with the
Agency, or based on a management-initiated change in work assignment that
results in a conflict with a pre-existing interest, except in circumstances
where the examiner knowingly concealed the conflict.

3. Proposal 17 Is Not Inconsistent with 5 C.F.R.
§ 2634.605

As discussed above in connection with Proposals 9 and 12, 5 C.F.R.
§ 2634.605(b)(5)(ii) provides that remedial action for conflicts revealed
from a reviewing official's examination of a financial disclosure statement
"may include" the seven actions listed therein. See note 22,
supra. Subsection 605(b)(5)(i) also provides that, except in unusual
cases, the remedial action that is identified as necessary "shall be completed
not later than three months from the date on which the filer received notice
that the action is required." 5 C.F.R. § 2634.605(b)(5)(i). A failure to
comply with a request for remedial action is subject to further action in
accordance with "agency procedures." 5 C.F.R.
§ 2634.605(b)(6)(ii).

As the Union points out, although a "voluntary request by the filer for
resignation[]" is listed in 5 C.F.R. § 2634.605(b)(5) as a
remedial action, a removal action is not. Accordingly, we conclude that
Proposal 17, which prohibits a removal action in certain situations, is not
inconsistent with that regulation.(28)

4. Proposal 17 Affects the Exercise of Management's Right to
Discipline Under Section 7106(a)(2)(A) of the Statute

Proposals that restrict the disciplinary penalty that can be imposed on
an employee affect the exercise of management's right to discipline employees
under section 7106(a)(2)(A) of the Statute. See, e.g., National
Association of Government Employees, Local R4-45 and U.S. Department of the
Navy, Naval Resale and Services Support Office, Norfolk, Virginia, 40 FLRA
56, 59 (1991) (Department of the Navy). Proposal 17 prevents removal of
an examiner for a conflict of interest resulting from a financial interest that
existed prior to employment or due to an Agency initiated change or work
assignment, except when the examiner knowingly conceals the conflict. Because
the proposal would preclude the Agency's choice of removal as the discipline to
impose except as noted, it affects the exercise of the right to discipline.
Id. at 61.

5. Proposal 17 Constitutes an Appropriate Arrangement Under Section
7106(b)(3) of the Statute and, Therefore, It Is Within the Duty to Bargain

It is clear that, as asserted by the Union, Proposal 17 would benefit
employees who are adversely affected by the exercise of management's right to
discipline because of conflicts created by the exercise of management's right
to assign work. This benefit applies only to those examiners who would be
discharged based on a conflict of interest that was not knowingly concealed.
SeePatent and Trademark Office, 49 FLRA at 184. As such,
the "balm" applied by Proposal 17 is narrowly tailored. Consistent with the
foregoing, we conclude that Proposal 17 is an arrangement for employees
adversely affected by the exercise of management's rights within the meaning of
section 7106(b)(3).

The benefit conferred on employees by Proposal 17 is the assurance that
they will not be removed based on an existing financial interest that they did
not knowingly conceal. As to the burden imposed by the proposal on management's
right to discipline, the proposal would not preclude the Agency from taking any
actions other than discharge, including reassigning the examiner, directing the
examiner to divest, or waiving the conflict. Thus, the proposal would not
prevent the Agency from taking action that remedies, or eliminates, the
conflict of interest. Cf.Professional Airways Systems Specialists,
Chapter 252 and U.S. Department of the Navy, Marine Corps Air Station, Cherry
Point, North Carolina, 44 FLRA 434, 441 (1992) (finding a proposal outside
the duty to bargain that restricted management from imposing penalties normally
imposed for a specified offense). In addition, the Agency remains free under
the proposal to impose discipline other than discharge for the conflicts
encompassed by the proposal; to discharge employees in situations where there
has been knowing concealment of the financial interest covered by the proposal;
and to discharge employees based upon other reasons, such as insubordination.

In balancing the burden the proposal imposes on management's right
against the benefit to employees, it is relevant, and the Agency does not
dispute, that the proposal applies only when there is no wrongdoing on the part
of the employee. That is, the conflicts of interest addressed by the proposal
do not arise because of wrongdoing on the part of the examiner and management
would not be precluded from removing an examiner who had engaged in wrongdoing
by knowingly failing to report necessary information on his or her financial
disclosure report, or by engaging in other improper actions, such as refusing
to divest the conflicting financial interest. SeePatent Office
Professional Association and U.S. Department of Commerce, Patent and Trademark
Office, Washington, D.C., 47 FLRA 10, 90 (1993), petition for
review denied as to other matters sub nom.Patent Office Professional
Association v. FLRA, 26 F.3d 1148 (D.C. Cir. 1994) (finding a provision
prescribing performance-based disciplinary actions that would protect employees
who had failed to meet performance requirements outside the duty to bargain);
Department of the Navy, 40 FLRA at 57-60 (finding a proposal that
prescribed disciplinary actions for infractions such as drug sales,
disobedience to authorities, gambling, and unexcused or unauthorized absences
outside the duty to bargain).

We conclude that the benefit to examiners of being assured that they
will not be removed in a situation where they engaged in no wrongdoing, and in
which the Agency is free to take a full range of other actions that remedy or
eliminate the conflict of interest, outweighs the burden on the Agency's rights
to discipline employees. Therefore, the proposal does not excessively interfere
with management's right, is an appropriate arrangement under section 7106(b)(3)
of the Statute, and is within the duty to bargain.

H. Proposals 15 and 16

Proposal 15

When an examiner asserts a Constitutional Fifth Amendment right
against self incrimination by refusing to submit a financial disclosure
statement, management shall not require the disclosure until immunity from
criminal prosecution has been granted.

Proposal 16

The Office hereby grants a waiver of criminal prosecution based upon
information derived from the employee's financial disclosure statement for any
examiner who, in good faith, fills out the financial disclosure statement and
fully complies with instruction from management regarding remedying conflicts
of interest.

1. Positions of the Parties

a. Agency

The Agency asserts that Proposal 15 is inconsistent with 5 C.F.R.
§ 2634.905, which, according to the Agency, permits the Agency to
"determine that certain employees should be excluded from filing requirements
based on the nature of their positions and work duties -- not on the
basis of their invocation of the Fifth Amendment." Statement of Position
at 29 (emphasis in original). In addition, the Agency claims that both
Proposal 15 and Proposal 16 are outside the duty to bargain because they
require the Agency to take actions that the Agency does not have authority to
take. The Agency states that as it does not have authority to engage in
prosecution of criminal violations, it also lacks the authority to grant
immunity from such prosecution.

b. Union

The Union asserts that Proposal 15 is intended to protect an examiner
from "unnecessary waiver of constitutional protections afforded under the Fifth
Amendment." Reply Brief at 47. The Union states, in this regard, that, by
regulation, information contained in financial disclosure forms "may be shared
with Federal, state, or local law enforcement officials[.]" Petition for Review
at 11. The Union asserts that Proposal 16 is intended to constitute "a blanket
waiver of criminal liability through the contract itself." Id.

According to the Union, Proposal 15 does not conflict with
5 C.F.R. § 2635.905 because if immunity from criminal prosecution
were granted, then examiners would be required to fully comply with all
disclosure requirements. In addition, according to the Union, the OGE
regulations must be read in a manner that renders them Constitutional and, to
do so, they must be read to permit employees to receive waivers from criminal
prosecution.

The Union asserts that, with respect to both Proposal 15 and Proposal
16, "[s]ince the Agency has a duty to bargain over these proposed changes in
working conditions, the Agency has a duty [to] seek and obtain the necessary
authority from appropriate sources to do so." Reply Brief at 47. However, the
Union does not dispute the Agency's assertion that it lacks the authority to
grant immunity from criminal prosecution.

2. Meaning of the Proposals

Proposal 15 would permit an examiner who asserts a Fifth Amendment
right against self-incrimination to refuse to submit a financial disclosure
statement until such time as immunity from criminal prosecution were granted.
Proposal 16 would grant examiners a waiver of criminal liability based on
information derived from a financial disclosure statement that was completed in
good faith.

3. Proposals 15 and 16 Are Outside the Duty To Bargain Because They
Require the Exercise of Authority The Agency Does Not Possess

As set forth previously, an agency is required under the Statute to
bargain to the extent of its discretion, provided that its discretion is not
sole and exclusive. Bureau of Engraving and Printing, 50 FLRA at 691-92.
In addition, Authority precedent confirms that, even where an agency lacks
authority to take an action specified in a proposal, the Agency may be
obligated to request that whatever entity that possesses such authority
exercise it consistent with a proposal. Library of Congress v. FLRA, 699
F.2d 1280, 1285-86 (D.C. Cir. 1983).

The Agency claims, and the Union does not dispute, that the Agency
lacks authority to either: (1) excuse examiners from filing requirements
until such time as a waiver of criminal prosecution has been granted; or (2)
waive criminal liability based on information disclosed in a financial
disclosure statement.(29) Nevertheless, the Union does not argue that Proposals 15 and
16 merely require the Agency to ask the entity that possesses such authority to
act consistent with the proposals. Instead, the Union claims that the Agency
would be obligated to "seek and obtain the necessary authority from
appropriate sources" to excuse examiners from filing requirements and grant
waiver of criminal liability. Reply Brief at 47 (emphasis added). This
statement confirms that the Union is proposing that the Agency itself
act to both excuse examiners from filing disclosure statements in the
situation encompassed by Proposal 15 and waive criminal liability. No basis is
argued or apparent for concluding that the Agency has discretion to both "seek
and obtain" such authority. As such, we conclude that the proposals are outside
the duty to bargain because they would require the Agency to exercise authority
it does not possess.

I. Proposal 21

The office hereby determines that the duties of positions which are
below GS-13 are positions at such a low level of responsibility that the
submission of a financial disclosure statement is unnecessary because of the
substantial degree of supervision and review over these
positions.

1. Positions of the Parties

a. Agency

The Agency contends that, by defining positions below the GS-13 level
as at such a low level of responsibility that they are excluded from financial
reporting requirements, Proposal 21 "would lead to conflicts over duties
and responsibilities that management would choose to assign to these employees,
but which the Union would dispute as exceeding their strict definition."
Statement of Position at 36-37. According to the Agency, the proposal
"places a significant limitation on the Agency's ability to determine the
duties and responsibilities to assign its employees, and thus constitutes
excessive interference with management's right to assign work." Id. at
37.

In addition, the Agency argues that Proposal 21 conflicts with 5 C.F.R.
§§ 2634.904(a) and 2634.905 because, according to the Agency, those
sections vest the Agency with sole and exclusive authority to determine those
employees whose job duties require the filing of financial disclosure reports.
The Agency also argues that the "blanket statement" that examiners below a
GS-13 do not need to file disclosure statements is inconsistent with 5 C.F.R.
§ 2634.905 because the Agency is required by the regulation to make that
determination based on an employee's particular job duties and
responsibilities. Id. at 37-38.

b. Union

The Union asserts that the work of examiners at GS-12 level and lower
is "closely reviewed and supervised" and, as such, "regardless of the financial
interests of the assistant examiner, no apparent conflict of interest exists
and hence there is no need for disclosure of this financial information."
Petition for Review at 13. The Union also asserts that Proposal 21 does not
affect management's right to assign work because the proposal concerns duties
currently assigned to examiners and does not prevent the Agency from assigning
different duties.

In addition, the Union contends that Proposal 21 is not inconsistent
with 5 C.F.R. §§ 2634.904(a) and 2634.905. The Union asserts, in this
regard, that the regulations "fail[] to contain any language which would give
an indication that the agency head's discretion is to be exclusive and
unfettered[.]" Reply Brief at 57. The Union also asserts that:

[T]he Agency has already determined that examiners in positions below
GS-13 are at such a low level of responsibility that the submission of a
financial disclosure statement is unnecessary because of the substantial degree
of supervision and review over these positions. Up until recently, even GS-13s
were exempted from the reporting requirements.

Id. at 56.

2. Meaning of the Proposal

Proposal 21 would exempt examiners at GS-12 level and lower from any
requirement to file financial disclosure statement. According to the Union, the
proposal "obviously applies to the current duties that have been assigned to
examiners who are below the level of GS-13." Reply Brief at 58. The Union
states that, "[s]hould management decide to assign different duties to those
employees that would necessitate a financial disclosure report, there is
nothing in the proposal that would prevent such an assignment." Id. The
Union's assertions are consistent with the plain wording of Proposal 21 and, as
such, are adopted for purposes of this decision. SeeLaurel Bay, 51 FLRA at 737.

3. Proposal 21 Does Not Affect Management's Right to Assign Work
Under Section 7106(a)(2)(B) of the Statute

As construed above consistent with the Union's statement of the meaning
of Proposal 21, nothing in the proposal would limit in any way the Agency's
right to assign any type or grade level of work.(30) The Agency provides no support for its assertion to the
contrary. Accordingly, we conclude that Proposal 21 does not affect
management's right to assign work under section 7106(a)(2)(B) of the
Statute.

4. Proposal 21 Is Not Inconsistent With 5 C.F.R.
§ 2634.905

a. The Agency's Authority Is Not Sole and Exclusive Under 5
C.F.R. § 2634.905

The Agency relies on both 5 C.F.R. §§ 2634.904(a)
and 2634.905 to argue that its authority to exempt employees from reporting
requirements is sole and exclusive.

5 C.F.R. § 2634.904 provides the standards agencies must apply
when determining which employees are required to comply with reporting
requirements. That regulation does not address the Agency's authority to exempt
employees from reporting requirements. Thus, 5 C.F.R. § 2634.904
is inapplicable to Proposal 21, which addresses only the Agency's authority to
exempt employees from reporting requirements.

Nothing in the plain wording of 5 C.F.R. § 2634.905 supports the
Agency's argument that its authority under the regulation is sole and
exclusive. In particular, as relevant here, section 2634.905 provides for
exclusions from filing requirements for individuals or classes of individuals
when "the agency head or designee determines" that the duties and
responsibilities do not require such filing.As noted
supra, in regard to Proposal 6, other sections of the OGE regulations
clearly indicate that other authorities are to be exercised at the "sole
discretion" of the subject official. Seesupra Section V, B, 3,
c. Because such exclusivity is made clear in other sections and not here, we
conclude that consistent with its plain wording, the authority granted to the
Agency in 5 C.F.R. § 2634.905 is not sole and exclusive.

b. Proposal 21 Is Not Inconsistent With 5 C.F.R. §
2634.905

The Agency claims that a blanket exemption of a category of employees
from filing financial disclosure reports is inconsistent with 5 C.F.R.
§ 2634.905. By exempting examiners at the GS-12 level and lower from any
requirement to file financial disclosure statements, Proposal 21 operates, in
effect, as a blanket determination that these examiners satisfy the standards
set forth in 5 C.F.R. § 2634.905. 5 C.F.R. § 2634.905 provides,
in relevant part, that:

[a]ny individual or class of individuals . . . may be excluded from
all or a portion of the confidential reporting requirements . . . when [the
Agency] determines that:

(a) The duties of a position make remote the possibility that the
incumbent will be involved in a real or apparent conflict of
interest;

(b) The duties of a position involve such a low level of
responsibility that the submission of a confidential financial disclosure
report is unnecessary because of:

(1) The substantial degree of supervision and review over the
position; or

(2) The inconsequential effect of any potential conflict on the
integrity of the Government;

. . . .

Nothing in 5 C.F.R. § 2634.905 indicates that determinations as to
whether its standards have been met must be done on a case-by-case basis.
Although the regulation specifies criteria that must be met, it explicitly
states that the Agency can make determinations as to a "class of individuals"
as well as to "any individual." Consistent with the plain wording of the
regulation, a blanket determination that a category of individuals, in this
case GS-12 and below examiners, are exempt from any reporting requirements is
not inconsistent with 5 C.F.R. § 2634.905.

In addition, the "determinations" set forth in Proposal 21--that
positions below GS-13 have a low level of responsibility, and have a
substantial degree of supervision and review--are consistent with those
required by the regulation. Thus, nothing in the proposal appears to be
incompatible or inconsistent with 5 C.F.R. § 2634.905. SeeOverseas Education, 40 FLRA at 442. Accordingly, we conclude that
Proposal 21 is within the duty to bargain.

J. Proposal 24

In accordance with 5 C.F.R. § 2634.905(a), the Agency head
hereby determines that there is little likelihood that there would be an
apparent or real conflict-of-interest with:

(a) a widely diversified excepted investment fund,

(b) residential realty of any kind,

(c) mortgages or other loans owed to financial institutions,

(d) financial interests and positions held in any company or
organization in industries other than those defined by the two digit prefixes
of the SIC codes provided to the examiner, and thus there is no need to include
such information in a confidential financial report.

1. Positions of the Parties

a. Agency

The Agency asserts that Proposal 24 is inconsistent with 5 C.F.R.
§ 2634.905. According to the Agency, that regulation permits
employees to be excluded from filing requirements "due to the nature of their
duties, but does not permit exclusion of particular types of financial
interest." Statement of Position at 41. In the alternative, the Agency contends
that determinations under 5 C.F.R. § 2634.905 rest exclusively
with the Agency head or designee.

b. Union

The Union contends that Proposal 24 "is intended to protect privacy of
employees by limiting the amount of information which needs to be disclosed."
Petition for Review at 14. According to the Union, the proposal: (1) "places
limits in areas where there is no need for review because of the nature of the
assets involved"; and (2) "preserves employee privacy with respect to financial
interests in companies whose business is remote from the technology examined[]"
by the examiner. Id. at 14-15.

The Union argues that 5 C.F.R. § 2634.905 "clearly
provides authority for the agency head to exclude any individual or class of
individuals from all or a portion of the confidential reporting
requirements." Reply Brief at 62-63 (emphasis in original). According to
the Union, the Agency's argument to the contrary has no basis. In addition,
according to the Union, "there is no indication in the regulations that the
discretion granted to the Agency head or designee is to be exclusive and
unfettered." Id. at 63.

2. Meaning of the Proposal

Proposal 24 would exempt examiners from including in their financial
disclosure statements information concerning specific types of interests: (1)
widely diversified excepted investment funds;(31) (2) residential real estate; (3) mortgages and other
loans owned to financial institutions; and (4) financial interests and
positions in companies or organizations other than those defined by the
two-digit SIC codes provided the examiner.

3. Proposal 24 Is Inconsistent With 5 C.F.R.
§ 2634.905

Under 5 C.F.R. § 2634.905, an individual or class of individuals
may be excluded "from all or a portion" of the reporting requirements for
confidential filers. The regulation provides that such individuals may be
excluded where an agency head determines that the nature of the duties of the
affected employees make the filing of disclosure reports unnecessary, or those
employees have an alternative procedure, approved by the Office of Government
Ethics, that adequately prevents conflicts. The parties disagree over whether
the agency is permitted by the regulation to exclude from reporting
requirements the four categories of information specified in Proposal 24.

The regulation does not specify whether, as the Union asserts, blanket
exclusions of specific financial interests are permissible under section
2634.905(a). Moreover, neither the Union nor the Agency offers any support for
their interpretation of the regulation. However, based on a reading of parts
2634 and 2635 as a whole, we conclude that the exclusions sought by Proposal 24
are inconsistent with the regulation for several reasons.

First, the bases stated in section 2634.905 for excluding individuals
from "all of a portion" of the reporting requirements all involve either the
duties performed by the individuals or the existence of an alternative
procedure. The regulation contains no criteria by which the agency would
determine whether to exclude financial interests from the reporting
requirements. Specifically, the regulation involves categories of
employees and not categories of interests.

Second, the three examples of exclusions in section 2634.905all involve excluding an individual employee (based on the employee's
duties or the existence of an alternative procedure) from filing a financial
disclosure report. There is no example of excluding a financial interest or
class of financial interests.

Third, the financial interests that must be reported on a disclosure
statement are specified in subpart C of part 2634, which is made
applicable to confidential filers by section 2634.907. Although section
2634.907 provides certain exceptions (which are not claimed to apply here) to
these reporting requirements, the regulation makes no other provision for
exclusion. To the contrary, section 2634.907 provides that reports by
confidential filers "shall include . . . a full and complete
statement of information required to reported according to the provisions of
subpart C . . . ." 5 C.F.R. § 2634.907(a).

Based on the foregoing, we conclude that the agency head's or
designee's authority under section 2634.905 does not extend to exempting
examiners from including in financial disclosure statements the categories of
financial interests that would be exempted under Proposal 24. Therefore, the
proposal is inconsistent with section 2634.905. SeeAmerican
Federation of Government Employees, National Border Patrol Council and U.S.
Department of Justice, Immigration and Naturalization Service, 51 FLRA
1308, 1330 (1996) (finding a provision inconsistent with regulation because the
agency's discretion to grant an exception under that regulation was limited).
Accordingly, we conclude that Proposal 24 is outside the duty to bargain.

K. Proposal 25

In accordance with 5 C.F.R. § 2634.905(c), the Office shall seek
approval for an alternative reporting plan with the Office of Government Ethics
consisting of the following:

(i) financial interests or positions held by an examiner, spouse,
or dependent child in any company or organization in the industries defined by
the two digit prefixes of S[tandard] I[ndustrial] C[lassification] codes
provided to the examiner,

(ii) gifts, travel reimbursements from companies or organizations
in the industries defined by the two digit prefixes of the SIC codes provided
to the examiner, and

(iii) other financial interests as the Office may determine by
adequate written justification to the examiner.

(b) The Office hereby determines that there is little likelihood
that there would be an apparent or real conflict of interest with a widely
diversified excepted investment fund and that there is no need to include such
information in a confidential financial disclosure
statement.

A POPA representative shall be included in the development and drafting
of the alternative reporting plan and the presentation to the Office of
Government Ethics.

1. Position of the Parties

a. Agency

The Agency claims that Proposal 25 is inconsistent with 5 C.F.R.
§ 2634.905(c) because, under that section, the discretion to decide
whether to seek OGE approval of an alternative procedure is solely and
exclusively the Agency's.

b. Union

The Union states that Proposal 25 is intended to require the Agency to
"seek approval of an alternative financial reporting plan developed with
[Union] input that reflects the nature of patent examination." Petition for
Review at 16. The Union claims that "there is nothing in the regulations or
their history that would create a record to conclude that the provisions of
5 C.F.R. § 2634.905 are the sole authority of the Agency." Reply
Brief at 64.

2. Meaning of the Proposal

Proposal 25 would require the Agency to seek OGE approval of an
alternative financial disclosure procedure that satisfies the criteria of the
proposal. That procedure would limit the financial interests needed to be
disclosed to those specified in section (a) of the proposal and would exempt
examiners from disclosing interests in the "widely diversified excepted
investment funds" specified in section (b).(32) The proposal also would require that a Union representative
be included in the development and drafting of the alternative procedure.

3. Proposal 25 Is Not Inconsistent With 5 C.F.R.
§ 2634.905

a. The Agency's Authority Is Not Sole and Exclusive

The plain wording of 5 C.F.R. § 2634.905(c) indicates
that the grant of discretion to the agency head or designee to seek an
alternative reporting system is not sole and exclusive and, as a result, may be
exercised through collective bargaining. Accordingly, consistent with previous
conclusions and precedent cited supra at Section V, B, 3, c, we conclude
that Proposal 25 is not inconsistent with 5 C.F.R. § 2634.905(c)
on this ground.

b. Proposal 25 Creates a Standard That Is Not Inconsistent With 5
C.F.R. § 2634.905

Nothing in 5 C.F.R. § 2634.905 indicates that determinations as to
whether an alternative procedure is adequate to prevent possible conflicts of
interests must be made on an individual case-by-case basis. As explained above
in our analysis of Proposal 21, 5 C.F.R. § 2634.905 explicitly
states that determinations made pursuant to that regulation can made as to a
"class of individuals." As such, it is not inconsistent with the regulation for
the Agency to seek an alternative reporting procedure for an entire class of
examiners.

Moreover, to the extent that the Agency believes that the criteria in
Proposal 25 are not adequate to prevent a possible conflict of interest, that
issue addresses the proposal's merits, not its negotiability, and can be
addressed during bargaining, mediation, or, if necessary, proceedings before
the Federal Service Impasses Panel.

Based on the foregoing, we conclude that Proposal 25 is not
inconsistent with 5 C.F.R. § 2634.905(c) and, as such, that it
is within the duty to bargain.

VI. Proposal Alleged To Be Outside the Duty To Bargain Because It
Does Not Concern a Condition of Employment

A. Proposal 22

A joint committee shall be formed to address conflict of interest
issues which are the result of seeking employment outside the Office. If the
committee reaches no agreement within one year of its inception, negotiations
on this topic will be reopened.

B. Positions of the Parties

1. Agency

The Agency argues that Proposal 22 is outside the duty to bargain
because it "concerns an issue -- conflicts resulting from subsequent employment
outside the Agency -- that is not a condition of employment with the Agency[.]"
Statement of Position at 38.

2. Union

According to the Union, a "real or apparent conflict of interest may
exist between an examiner's official duties and his interest in securing
employment outside the [Agency][.]" Petition for Review at 14. The Union states
that Proposal 22 is intended to create "a separate joint committee to address
the prospective employment problem apart from other conflicts of financial
interest such as stock ownership." Id. The Union contends that Proposal
22 concerns conditions of employment because:

As the plain language of the proposal makes clear, the committee
would address real and apparent conflicts that are the result of current
employees seeking employment outside the [Agency]. The real and apparent issues
addressed by the committee would be the result of the employee looking for
another job while an employee of the Agency.

Reply Brief at 59.

C. Meaning of the Proposal

The proposal would establish a joint labor-management committee "to
address conflict of interest issues which are the result" of currently employed
examiners seeking employment outside the Agency.

D. Proposal 22 Is Within the Duty to Bargain Because It Concerns a
Condition of Employment

Section 7103(a)(12) of the Statute defines "collective bargaining," as
relevant here, as the parties' mutual obligation to bargain "with respect to .
. . conditions of employment . . . ." "Conditions of employment" are defined in
section 7103(a)(14), with exclusions not relevant here, as "personnel policies,
practices, and matters, whether established by rule, regulation, or otherwise,
affecting working conditions[.]"

In determining whether a proposal concerns a condition of employment,
the Authority applies a two-prong test. In particular, the Authority determines
whether: (1) the proposal pertains to bargaining unit employees; and (2) the
record establishes that there is a direct connection between the proposal and
the work situation or employment relationship of unit employees. E.g.,
Antilles Consolidated Education Association and Antilles Consolidated School
System, 22 FLRA 235, 237 (1986).

With regard to the first prong of the test, it is clear that the
proposal pertains to current unit employees. With regard to the second prong of
the test, it is equally clear that there is a direct connection between the
proposal and the work situation of unit employees. The proposal would establish
a joint labor management committee to address conflict of interest issues. It
is undisputed that, as the Union asserts, the conflicts arise in connection
with an employee's current job duties. Although the committee's charge
encompasses conflicts involving efforts to secure outside employment, the
conflicts themselves would implicate employees' positions and job duties in the
Agency. Indeed, seeking outside employment can itself create conflicts with
employees' jobs and duties. In recognition of this, an entire subpart--subpart
F-- of Part 2635 is devoted to regulations governing requirements applicable to
employees when they are "seeking other employment." Among other things, the
"overview" to these regulations provides, in pertinent part:

This subpart contains a disqualification requirement that applies to
employees when seeking employment with persons who otherwise would be affected
by the performance or nonperformance of the employees' official
duties.

5 C.F.R. § 2635.601.

In these circumstances, there is a direct connection between the
proposal and employees' work situation or employment relationship.
Consequently, we conclude that the proposal concerns a condition of employment
of unit employees and is within the duty to bargain.

XI. Order

The petition for review, as it pertains to Proposals 4, 5, 9(c), 10(b),
11, 13, 14, and 20 is dismissed without prejudice to the Union's right to file
a negotiability appeal if the Agency alleges that the proposals are outside the
duty to bargain and the other conditions governing review are satisfied. The
petition for review, as it pertains to Proposals 12, 15, 18, 19, and 24 is
dismissed because the proposals are outside the Agency's duty to bargain.
Proposals 1, 2, 3, 6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25 are
within the Agency's duty to bargain. Accordingly, the Agency shall upon
request, or as otherwise agreed to by the parties, negotiate over Proposals 1,
2, 3, 6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25.

FOOTNOTES: (If blank, the decision does not
have footnotes.)

1. Because of the length of 5 C.F.R.
parts 2634 and 2635, we have not reproduced the entire text of either
regulation in an appendix. However, relevant portions of both regulations are
provided in the decision.

participate[] personally and substantially as a Government officer or
employee, through decision, approval, disapproval, recommendation, the
rendering of advice, investigation, or otherwise, in a judicial or other
proceeding . . . in which, to his knowledge, he . . . has a financial interest
. . . .

18 U.S.C. § 208(a) (1996).

3. Following the filing of the petition
for review, the Agency provided the Union with written allegations.

4. We do not discuss each proposal in
the order in which they were numbered by the Union. Instead, the proposals are
grouped in this decision according to the issues that are pertinent to their
analysis. The proposals addressed in this section are alleged by the Agency to
be inconsistent only with management's rights. Those proposals are 1, 2, 3, 7,
8, and 23.

The past practice regarding conflict of interests precludes a patent
examiner from having a financial interest in companies that file patent
applications in the technology that the examiner himself actually examines,
that is, only within his own docket. The specifics of the existing practice has
not been written down in any policy document of which we are aware; the
practice has only been communicated orally.

Reply Brief at 3. The Agency does not address past practice.

6. The Union requests the Authority to
consider the negotiability of the first and second sentences of Proposal 1
separately.

7. The meanings that we adopt for the
proposals in this case would apply in resolving other disputes, such as
arbitration proceedings, where the construction of these proposals is at issue.
SeeNational Education Association, Overseas Education Association,
Laurel Bay Teachers Association and U.S. Department of Defense, Department of
Defense Domestic Schools, Laurel Bay Dependents Schools, Elementary and
Secondary Schools, Laurel Bay, South Carolina, 51 FLRA 733, 741-42 n.8
(1996).

8. Employee divestitures of conflicting
interests are addressed in 5 C.F.R. § 2635.402(e). Divestitures may be
"voluntary" or "directed." 5 C.F.R. § 2635.403(e)(1) and (2). After
divestiture, applicable statutory and regulatory provisions "will no longer
prohibit the employee's participation in the matter." Id.

service, with or without compensation, as an officer, director,
trustee, general partner or employee of any person, including a nonprofit
entity, whose financial interests are imputed to the employee . . .
.

This section also confirms, by the example offered in it, that the
Agency may require employees or spouses to resign positions as a condition of
their participation in matters that otherwise would be prohibited because of
conflict.

10. The proposals addressed in this
section of the decision are those alleged by the Agency to be inconsistent with
Government-wide regulation: Proposals are 6, 9, 10, 12, 15, 16, 17, 18, 19, 21,
23, 24, and 25. This section also addresses the Agency's additional allegations
that Proposals 6, 17 and 21 are inconsistent with management's rights under
section 7106 of the Statute.

11. Prior to the Authority's decision
in Bureau of Engraving and Printing, the Authority's analysis of claims
under section 7117(c) did not always distinguish clearly between these two
types of allegations. That is, the Authority would treat an argument that a
proposal was inconsistent with an agency's sole and exclusive discretion as one
raising both that issue and the issue whether the proposal was otherwise
substantively inconsistent with the law granting the discretion. See,
e.g., Overseas Education, 40 FLRA at 441-43.

12. The types of proposals discussed
herein are intended merely to illustrate--not define--the scope of this
category.

13. See alsoUnited States
Department of Justice v. FLRA, 727 F.2d 481, 489-90 (5th Cir. 1984)
(finding that specificity of the factors set forth to determine "greatest
advantage to the Government" in choosing mode of travel mandates case-by-case
determination) (Department of Justice).

14. See alsoNational
Treasury Employees Union and U.S. Department of the Treasury, Office of Chief
Counsel, Internal Revenue Service, 39 FLRA 27, 35-36 (1991),
decision and order on request for reconsideration as to other matters,
40 FLRA 849 (1991), enforced in part, vacated in part, and remanded in part
as to other matters, 960 F.2d 1068 (D.C. Cir. 1992), decision and order
on remand as to other matters, 45 FLRA 1256 (1992))(proposal that precluded
an agency from denying an employee's request for leave unless the employee's
presence was "absolutely essential and there [was] no suitable replacement"
available, conflicted with the standard set forth in regulation that an agency
grant compensation time "[t]o the extent that such modifications in work
schedules do not interfere with the efficient accomplishment of an agency's
mission.") (Office of Chief Counsel); Service and Hospital Employees
International Union, Local 150 and Veterans Administration Medical Center,
Milwaukee, Wisconsin, 35 FLRA 521, 530 (1990) (finding a proposal
permitting an agency to change work schedules only in "unanticipated emergency
situation[s]" outside the duty to bargain because regulation contemplated other
situations where agency could change schedules).

15. See alsoInternal
Revenue Service, Los Angeles v. FLRA, 902 F.2d 998 (D.C. Cir. 1990)
(finding a proposal outside the duty to bargain because it permitted an
employee to designate a smoking area irrespective of regulatory requirements,
effectively taking the authority to make such a determination away from the
agency head) (IRS).

16. The concept of a "direct and
predictable" effect or impact is involved in several proposals. It derives from
5 C.F.R. § 2635.402(a), where the statutory prohibition provided in
18 U.S.C. § 208(a) is restated. "Direct and predictable effect" is
defined in 5 C.F.R. § 2635.402(b)(1) as:

(I) A particular matter will have a direct effect on a financial
interest if there is a close causal link between any decision or action to be
taken in the matter and any expected effect of the matter on the financial
interest. An effect may be direct even though it does not occur immediately. A
particular matter will not have a direct effect on a financial interest,
however, if the chain of causation is attenuated or is contingent upon the
occurrence of events that are speculative or that are independent of, and
unrelated to, the matter. . . .

(ii) A particular matter will have a predictable effect if there is a
real, as opposed to a speculative possibility that the matter will affect the
financial interest. It is not necessary, however, that the magnitude of the
gain or loss be known, and the dollar amount of the gain or loss is immaterial.

17. The Agency also makes the general
claim that the proposal conflicts with 5 C.F.R. part 2634. However, no
specific section of that part is cited and it is not otherwise apparent that
the proposal conflict with that Part.

18. We note, in this regard, that
there is no contention that the Union is seeking a regulatory waiver from the
Office of Government Ethics.

19. We note that the Union argues that
5 C.F.R. § 2635.402 does not apply to Proposal 19 and that, instead,
5 C.F.R. § 2635.403 applies. However, it is clear that both sections
may apply. In this regard, 5 C.F.R. § 2635.401 provides that the
regulation contains a disqualification requirement and a prohibition on
acquiring or continuing to hold specific financial interests where a conflict
of interest exists. Consistent with this provision, an employee may be
prohibited from acquiring or holding certain financial interests under
5 C.F.R. § 2635.403 -- through either a regulatory prohibition of
general applicability under section (a) or an individual prohibition under
section (b). However, even if a particular interest has not been prohibited,
employees must disqualify themselves from participating in particular matters
under 5 C.F.R. § 2635.402 unless a waiver has been granted or the
conflicting interest has been divested. A proposal seeking to define
permissible interests, therefore, may involve both regulatory provisions
because it would: (1) define those matters for which waivers would be required
under 5 C.F.R. § 2635.402 if the interests otherwise satisfied the
requirements for disqualification; and (2) preclude the Agency from prohibiting
the acquisition or holding of the interests under 5 C.F.R.
§ 2635.403.

20. We note, in this regard, as we did
with Proposal 19 that there is no contention that the Union is seeking a
regulatory waiver from the Office of Government Ethics.

21. In view of our determination, we
do not address the Agency's claim that Proposal 18 is inconsistent with 5
C.F.R. § 2635.403(b).

23. The terms "recusal,"
"disqualification," and "waiver" are not defined in 5 C.F.R. part 2634.
However, the term "disqualification" is defined in 5 C.F.R. § 2635.402(c)
as an employee "not participating in the particular matter." "Waiver of
disqualification" is addressed in 5 C.F.R. § 2635.402(d) as:

An employee who would otherwise be disqualified . . . may be
permitted to participate in a particular matter where the otherwise
disqualifying financial interest is the subject of a regulatory or individual
waiver . . . .

It is not disputed that a "waiver" as provided for in Proposals 9
and 12 means that the Agency would grant the examiner an individual waiver
pursuant to 5 C.F.R. § 2653.402(d)(2).

24. Part 2634 generally sets forth the
uniform procedures and requirements for financial disclosure and for the
certification and use of qualified blind and diversified trusts. Additionally,
that part establishes procedures for executive branch personnel to obtain
Certificates of Divestiture. Section 2634.605, Review of reports, and
subsection 2634.605(b)(5), Remedial action, addresses the
responsibilities of the official reviewing financial disclosure reports and the
remedial actions that official may take where a report reveals a violation of
applicable laws or regulations.

25. It is our understanding from the
parties' submissions that the examiners involved in this case are required to
file financial disclosure statements by virtue of Agency determinations under 5
C.F.R. § 2634.904(a)(1)(iv) and (a)(2). See Statement of Position
at 27-28, 37.

26. Section (c) of 5 C.F.R. §
2634.605, which sets forth an expedited procedure to review financial
disclosure statements of individuals nominated by the President for appointment
to positions requiring the advice and consent of the Senate, states that:

The designated agency ethics official's certification
responsibilities in § 2634.605(c) are nondelegable and must be
accomplished by him personally, or by the agency's alternate designated agency
ethics official, in his absence.

5 C.F.R. § 2634.605(c) Note.

27. The Agency also contends that, in
certain circumstances, "a reasonable time for divestment would be less than the
30-day period mandated by the Union's proposal." Statement of Position at 25.
However, this contention addresses the proposal's merits, not its
negotiability, and can be addressed during bargaining.

28. We note, in this regard, that the
fact that a removal action is not identified as a remedial action in the
regulation does not mean that a removal action would not be available under
"[A]gency procedures" in the event an examiner failed to comply with a
requested remedial action. It also does not mean that a removal is not
available as an exercise of management's right to discipline, as discussed in
the next section.

Where the employee's conduct violates a criminal statute, reliance on
the advice of an agency ethics official cannot ensure that the employee will
not be prosecuted under that statute. . . . An agency ethics official is
required by 28 U.S.C. 535 to report any information he receives relating to a
violation of the criminal code, title 18 of the United States Code.

This confirms that the Agency has no authority to grant immunity from
criminal prosecution based on information contained in an employee's financial
disclosure statement.

30. There is nothing in the record
that even suggests that the proposal was intended to link the Agency's
assignment of duties to an examiner's grade level. However, even assuming
arguendo that the proposal was intended to tie the examiners' work
assignments to their grade level, Authority precedent establishes that such a
proposal could be found within the duty to bargain. See, e.g.,
Laborers' International Union of North America, AFL-CIO-CLC, Local 1267 and
Defense Logistics Agency, Defense Depot Tracy, Tracy, California, 14 FLRA
686, 694 (1984) (proposal providing that employees could expect assignments to
be made consistent with their grade level was within the duty to bargain);
American Federation of Government Employees, AFL-CIO, Local 1858 and
Department of the Army, U.S. Army Missile Command, Redstone Arsenal,
Alabama, 10 FLRA 440 (1982) (proposals requiring that work assignments be
made in a manner reflective of the grade level and performance requirements of
an employee are within the